Restaurant chain’s $10.99 burger deals McDonald’s, Wendy’s big blow
The burger wars came under fire when national restaurant chain Chili’s launched an affordable burger meal that took direct aim at fast food chains including McDonald’s and Wendy’s.
Chili’s plan: Get customers who visit stores more frequently.
As burger wars go, this one looks like it’s been won. Chili’s has seen an increase in the number of customers at its restaurants, including those who usually visit its fast food rivals. Meanwhile, McDonald’s and Wendy’s have seen a decline in foot traffic, forcing them to return to their roots and, in Wendy’s case, close hundreds of stores.
Year Founded: 1975 (Dallas, Texas)
Locations (worldwide): 1,579, 1,208 of which are in the US
Employees: ~70,000
Fiscal year sales (2025): $4.9 billion. Source: Brinker International SEC filings; 10-Qs and 10-Ks.
The risks are undeniably great. Burgers are the most popular menu item sold by restaurants, with total sales expected to be $173.6 billion this year, accounting for nearly 40% of fast food sales. IBISworld.
Chili’s is winning the burger wars against its fast-food rivals.Jeff Greenberg/Getty Images” loading=”eager” height=”640″ width=”960″ class=”yf-1gfnohs loader”/>
Chili’s is winning the burger wars against its fast-food rivals.Jeff Greenberg/Getty Images
Considering the money at stake, it’s no surprise that Chili’s wants to raise a flag. In April 2024, added Add Big Smasher to the “3 for me” menu. This $10.99 burger deal included bottomless chips and salsa, a bottomless drink, burger, and fries, all priced in the same ballpark as value meals from McDonald’s and Wendy’s.
“We know diners are experiencing sticker shock due to the rising cost of fast food, even though there has been little change in the actual quantity or quality of fast food combo meals,” said George Felix, Chili’s chief marketing officer at the time. “We believe Chili’s 3 For Me offers better value than you’ll find at any drive-thru.”
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The move comes at a critical time for the casual dining chain. Chili’s owner Brinker International had missed Wall Street’s revenue estimates in three of the previous four quarters, and quarterly sales growth had slowed in the previous three quarters.
The decision to target fast food burger chains was deliberate. CEO Kevin Hochman during Brinker’s March 2024 earnings call in question:
Hochman went on to explain why he felt the burger deal would resonate, noting that although fast food and casual dining are different, waiter-level dining service “offering superior value and better food at a more attractive price point is making it very exciting for guests.”
He was right. While fast food chains struggle with declining foot traffic and lackluster same-store sales, Chili’s has experienced a surge in visits and revenue growth.
Last quarter, foot traffic increased by a double-digit percentage and sales increased 21% year-over-year; This is a remarkable achievement considering that rising unemployment and inflation have led many consumers to cut back, especially low-income households.
Consumers cutting their budgets was particularly problematic for quick-service restaurants, or QSRs, such as McDonald’s and Wendy’s; Both admitted to being lenient among the low-income customers who most frequently visit their restaurants.
“In the US, we continue to see a bifurcated consumer base, with QSR traffic from low-income consumers falling by nearly double digits in the third quarter; this trend has continued for nearly 2 years. accepted McDonald’s CEO Chris Kempczinski on the Nov. 5 earnings call.
McDonald’s sales at stores open at least a year rose 2.4% last quarter in America; much less than Chili’s, where same-store sales rose 21.4%. The situation was even worse for Wendy’s, which experienced a 4.7% decline in same-restaurant sales in the US last quarter.
The fast food industry’s trouble was clearly Chili’s gain, and Chili expects its $10.99 burger deal to continue positioning itself for success, given that many are struggling financially.
Low-income customers’ visits to McDonald’s and Wendy’s have decreased, but that’s not the case at Chili’s.
“Our fastest growing group is now households with incomes under $60,000,” Hochman said. “We are gaining market share in lower-income households, while others are reporting softness in this group.”
A casual dining experience at Chili’s is arguably a more relaxing experience, and if Chili’s can maintain its price, it can maintain its edge over its competitors.
But McDonald’s and Wendy’s are not out of the fray, and neither will give up market share easily.
McDonald’s, for example, responded by expanding its value meal lineup and reintroducing its popular $2.99 Snack Wraps.
“In early September, we brought extra value meals back to the menu to ensure fans can find affordable prices on our menu boards every day,” McDonald’s CFO Ian Borden said on the conference call.
Wendy’s plan, called “Project Fresh,” aims to restore consumers’ perception of their roots in basic quality food through marketing and improved restaurant experiences. It is also closing nearly 300 underperforming locations and introducing new menu items, including “Tendys” related to chicken tenders, to boost traffic elsewhere.
“The first leg of Project Fresh is to revitalize the Wendy’s brand. It’s about positioning Wendy’s as the freshest, highest-quality choice on QSR by celebrating what makes us stand out from the competition.” in question Wendy’s CEO Ken Cook.
“Closing underperforming units is expected to increase sales and profitability at nearby locations.”
Time will tell whether these moves will be enough to win back Chili’s remaining customers.
Related: Chick-fil-A escapes problem customer trend hurting Wendy’s
