Even deals can’t reverse startling trend in the fast-food industry

It is no secret that consumers have been rebelling against skyrocketing fast-food prices by cooking at home. Fast food is now viewed as a luxury by almost 80% of Americans, according to a recent survey from LendingTree.

While this growing trend is gaining momentum, it is hurting the pockets of major fast-food chains, which have been reporting declining sales.

In an effort to gain back frugal customers, an increasing number of fast-food chains have been rolling out meal deals for lower prices, but the initiative isn’t going as planned.

Related: McDonald’s is facing the brutal aftermath of price increases

Yum Brands ( YUM ) , which owns Taco Bell, KFC, and Pizza Hut, has just revealed in its second-quarter earnings report for 2024 that its net income declined by 12%.

While Taco Bell's U.S. same-store sales increased by 5% during the quarter compared to the same time period last year, KFC’s shrunk by 5%, and Pizza Hut’s declined by 1%. In addition, all three fast-food chains also faced dwindling same-store international sales.

The shrinking sales come after each brand recently introduced value meal deals to their menus. In October last year, Pizza Hut launched its $7 Deal Lovers menu , where customers can choose two or more items “for just $7 each.”

In January, Taco Bell rolled out its Cravings Value Menu, which features 10 menu items for $3 or less. Also, in April, KFC introduced its Taste of KFC deals value menu, which starts at $4.99 for a meal for one.

During a recent earnings call , which discussed the earnings report, Yum Brands CEO David Gibbs claimed that the deals have improved sales trends compared to the previous quarter, but major headwinds remain.

“While we take comfort in improving global trends and still expect the first quarter will mark the low for same-store sales growth, significant volatility remains, and we recognize sales in some markets are not where we want them to be,” said Gibbs. “The impacts of the Middle East conflict, in addition to a more cost-conscious consumer, have presented headwinds to same-store sales.”

Related: ​​White Castle makes a change McDonald's just abandoned

McDonald's faces challenges with its own value meal deal

Yum Brands isn’t the only company struggling to yield significant results from its value meal deals.

McDonald’s unveiled its $5 Meal Deal in late June. The deal allows customers to purchase a $5 meal that consists of a McChicken or a McDouble, four-piece chicken nuggets, fries, and a drink. Recently, a BTIG analyst revealed that the deal is failing to significantly boost foot traffic at McDonald’s restaurants.

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McDonald’s CEO Chris Kempczinski confirmed during an earnings call on July 29 that the meal deal is indeed beginning to increase store traffic, but it “hasn't yet translated into sales.”

It is no surprise that consumers are still avoiding fast-food restaurants. Over the past decade, fast-food prices across the nation have increased by almost 47%, further frustrating consumers who are also battling layoffs , record inflation, and a decrease in affordable housing.

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