The trend: Economic uncertainty is driving higher-income people to trade down to lower-priced quick-service restaurant (QSR) options and lower-income consumers to seek a deal when they’re looking for a quick meal.
Making the right bet: Both Taco Bell and Chipotle introduced special menu items during the quarter. But while Taco Bell’s reintroduction of the Mexican pizza menu item helped propel the company’s growth, Chipotle’s launch of the garlic guajillo steak menu item failed to meet the company’s expectations, which it attributed to the challenging economic landscape.
Rewarding customers: Looking ahead, Chipotle aims to drive growth by bolstering its rewards program with more targeted offers and gamified badges.
The big takeaway: QSRs that can effectively communicate the value of their offerings stand to benefit from consumers trading down from more expensive restaurants. But that’s easier said than done given that food and labor prices continue to rise.
This article originally appeared in Insider Intelligence's Retail & Ecommerce Briefing—a daily recap of top stories reshaping the retail industry. Subscribe to have more hard-hitting takeaways delivered to your inbox daily.
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