Many fast-casual dining brands built their business by offering higher-quality food for higher prices.
Chipotle, for example, charges more than Taco Bell, but few would argue that its better product isn’t worth paying more
These brands use a quick-serve model to save money by not having servers, but they offer food quality that’s similar, if not equal to, that of sit-down chains, including Chili’s, Applebee’s, Red Lobster, and others. Consumers seemed to understand the difference between price and value when the economy was stronger. That, however, has changed as more Americans have been trading down to cheaper brands. “When gas prices cross that $3.50 threshold, we don’t just see a reduction in consumer spending; we see a fundamental migration of market share,” Victor Fernandez, chief insights officer at Black Box Intelligence, told QSR Magazine. “For limited-service brands, this is a prime acquisition moment.
You are receiving an influx of guests trading down.” That’s backed up by data from Placer.ai. “Budget-conscious diners are trading down to cheaper promotions or shifting spending to grocery, dollar, and convenience stores,” the report showed. That’s a positive for chains such as McDonald’s, which have leaned heavily into value, and chains already perceived as cheap (like Taco Bell), but it has been a challenge for pricier players like Five Guys. Five Guys faces a pricing challenge Five Guys has closed more than a dozen locations across seven states.