Fast food vs. fast casual – a battle is brewing

The draw of fast food has always been simple: it’s fast, easy, and cheap. But the third value prop is increasingly starting to go by the wayside.

• A recent FinanceBuzz report found fast-food prices have risen 60% on average between 2014 and 2024. For context, inflation was ~30% over that same period.

These price increases have been especially pronounced since Covid. According to a recent analysis from TheStreet, the cost of 30 popular items at six prominent fast-food chains increased an average of 77.4% between December 2019 and March 2024.

Fast-casual dining chains are seeing an opportunity to steal market share. Dine Brands, which owns Applebee’s and IHOP, is currently working on an ad campaign designed to draw consumers away from fast food and toward its brands. “The Whole Lotta Burger for $9.99 – if you can have our burger for $10, which is great quality… and eat in our restaurant, in our experience, why would you eat a $10 burger out of a paper bag in your car?” Dine Brands CEO John Peyton told CNBC.

And Applebee’s/IHOP aren’t the only casual dining chains utilizing this approach. Chili’s recently rolled out an ad campaign that calls out the Big Mac and other fast-food burgers for their prices.

Bottom line: As inflation continues to squeeze households, consumers are being more wary with their discretionary spending – leaving brands to compete for a bigger piece of a smaller pie.