Making Waves: Which Way Will the Price Pendulum Swing

With 2025 quickly approaching, most companies can’t wait to turn the page to a new year. 2024 was a struggle for multiple industries and that couldn’t be truer than for restaurants. They almost universally had a bad year that was filled with dwindling sales and traffic plus attempts to completely overhaul menus and branding to recapture consumers. The strategies employed by restaurants to stem the tide were inconsistent, yet some of them bore fruit. As restaurants head into next year, they have a decision to make. Do they double down on the temporary value deals that seem to resonate with consumers, or do they firmly establish themselves as a brand that won’t bend on quality for the sake of a lower price? There is no clear right answer, yet many restaurants have already made their choice.

The restaurant industry can’t afford a repeat of 2024. Mass bankruptcy filings, store closures, and the shuffling of executives could cripple some of the biggest names in the business if things don’t turn around. McDonald’s, one of the largest names in play, is leading the charge on trying to bring value back to menus. Earlier this year, McDonald’s kicked off the value craze when they launched their $5 meal deal. This caused a ripple effect of other restaurants creating their own version of a value deal or menu. McDonald’s original promotion was only supposed to last two months in the summer, yet it kept getting extensions all the way through the end of the year. Now, McDonald’s is preparing to launch a “McValue” deal early next year. The plan is not solidified; however, it would be similar to the $5 deal with additional options. Just like earlier this year, we can expect other restaurants to follow suit and create more long-lasting value options for 2025. There will certainly be questions about the cost of offering value meals over a long period of time, yet so far, the increase in traffic appears worth the risk.

Of course, not every restaurant is going to jump on the value train. Doing so can reduce already thin margins, and it could make a product feel less premium than a brand would like. Companies that feel this way have chosen to stick to their higher prices and services in order to offer an experience that a customer can’t get somewhere else. Starbuck’s, another big player in the industry, has taken the stance of offering a premium product over a value deal. They were one of many companies this year that replaced their CEO and the new management has changed the direction for the company. By pairing back the menu and focusing on select products, the company is hoping to maintain their price point and provide a balance of quality and value to the consumer. This strategy could be highly effect for places like fine dining restaurants where offering too many value options could compromise the perceived quality of their brand.

2024 proved that the current way of doing business wasn’t working for consumers. The year was filled with some wild ideas and now we will get to see the distilled version of those ideas put forth in the new year. They will need to adjust these strategies on the fly to draw in consumers who have become very elusive when it comes to eating out. Restaurants are feeling that 2025 will turn their fortunes around. There is belief that we will see more expansion than closures and more new concepts than bankruptcies. There is also the belief that next year we could see some restaurants going public for the first time in over a year. You can’t just wash away a bad year, yet many restaurants seem to think they have the formula to make it an afterthought.