For decades, consumers viewed grabbing a burger and fries as a quick, affordable meal. However, relentless price hikes are changing consumers’ outlook. Many QSRs’ average menu items cost more than 50 percent now than in 2014. The top 10 fast food restaurants alone have gotten 63 percent more expensive since 2014, leaving 78 percent of Americans to treat fast food as a luxury purchase. 

This attitude is a fundamental change in how consumers perceive and interact with an industry that once prided itself on accessibility and affordability. As fewer consumers eat fast food, QSRs face a make-or-break moment. They must strike a delicate balance between value offerings and enhanced experiences that justify higher price points to avoid alienating customers. 

There’s no one-size-fits-all solution. Some industry giants are doubling down on value, while others are embracing their newfound “luxury” status. For QSRs to survive this shift, they must have a nuanced understanding of changing consumer expectations and a willingness to redefine what “value” means in today’s competitive market. 

Industry responses: Balancing value and quality 

Over 60 percent of customers are eating less fast food due to rising prices, requiring brands to change their strategies. A popular tactic adopted by major chains like McDonald’s is the value-driven approach, which aggressively implements ultra-cheap deals and value meals. This strategy has achieved some success in winning back cost-conscious customers by driving foot traffic, increasing transaction volumes and creating the perception of affordability. However, razor-thin margins on these deals can strain profitability, and there’s a danger of brand dilution if quality suffers in the pursuit of lower expenses. 

Conversely, chains like Shake Shack and Chipotle are leaning into a quality-focused approach, emphasizing premium ingredients, unique menu offerings and enhanced dining experiences. This strategy can lead to stronger brand loyalty, higher average ticket sizes and a more differentiated market position. But the challenge lies in convincing customers that the elevated experience is worth the premium price, especially in a cost-sensitive environment. 

To be clear, selecting the right pricing strategy isn’t a simple choice between value and quality. They aren’t on opposite sides of the spectrum but rather aspects to consider together. QSRs should stop thinking about price tags and ingredient quality as isolated components. Instead, focus on the overall proposition; food quality, level of service, restaurant ambiance and convenience all play into the customer’s perception of value. 

Convenience, in particular, often gets overlooked in these discussions. For example, a coffee chain might make average coffee, but it can still sell a $5 cold brew because of its many locations, speedy checkout time and efficient mobile ordering.  

Whether through strategic pricing, exceptional service, unique menu items or unbeatable convenience, QSRs must find their own formula for delivering value that aligns with their brand identity and customer expectations. 

Leveraging loyalty and restaurant technology for a luxury experience 

While flashy tech and exclusive digital offerings appeal to customers, QSRs shouldn’t rely on these alone to create a high-end experience. The real value lies in leveraging data-driven loyalty programs, targeted promotions and operational improvements that elevate the fundamentals: great service and fresh, quality food. 

When applied thoughtfully, these solutions can justify elevated price points and foster customer loyalty. Here’s how QSRs can strike this balance: 

• Scientific approach to value menus: Implement strategic testing to maximize incrementality. Ensure new offerings drive additional revenue without cannibalizing premium items. The goal is to increase visit frequency and overall traffic. 
• Exclusive rewards and experiences: Create secret menus, special events or unique rewards that make customers feel like insiders. This exclusivity can rationalize premium pricing and build brand loyalty. 
• Operational excellence: Use technology to streamline operations, improve order accuracy and reduce wait times. These improvements will positively impact the overall customer experience. 
• Focus on fundamentals: Remember that no amount of tech can replace good customer service and quality food. Use technology to support and enhance these core elements. 
• Targeted discounts and loyalty programs: Gain insight from customer interactions to offer personalized promotions that feel deluxe, not generic. This approach drives sales and fosters a sense of feeling valued, a key component of luxury experiences. 

Blaze Pizza exemplifies the power of a well-executed loyalty program in the fast-casual space. Their data-driven approach significantly boosted loyalty visits and participation rates, resulting in a substantial member base of a million+ people. This robust digital presence proved crucial during industry challenges, allowing Blaze to swiftly implement features like contactless options and maintain customer engagement through innovative digital campaigns. As QSRs navigate the current landscape of higher price points, such loyalty initiatives can help lean into the “luxury” perception while fostering customer retention. 

With most Americans already viewing fast food as a luxury purchase, the challenge now is to meet—and exceed—these elevated expectations. Quick and affordable are no longer the primary ingredients for success. QSRs must build their own service recipe by offering value without compromising quality, leveraging technology while maintaining the human touch and cultivating a luxury experience to deliver more bang for customers’ buck.  

Savneet Singh is the President & CEO of PAR Technology Corp. (NYSE:PAR), one of the largest restaurant technology companies in the world. After taking the helm at PAR, Savneet restructured and recapitalized the business from near bankruptcy to a market cap of over $1 billion.  

Mr. Singh is also a partner of CoVenture, LLC, a $2.5b multi-asset manager with funds in venture capital, direct lending, and cryptocurrency. In 2009, Mr. Singh co-founded GBI, a large financial software platform that allows investors to buy, trade and store physical precious metals. Prior to GBI Savneet worked in the investment banking department of Morgan Stanley.  

Mr. Singh has served on the Boards of a number of public and private companies including PAR Technology (NYSE:PAR). Mr. Singh received his B.S. in Applied Economics and Management from Cornell University and received numerous awards including the Forbes 30 under 30 and Crains 40 under 40.