Higher-income earners may be swapping their Sweetgreen and Just Salad for less healthy lunch options as diners increasingly put price above all else, according to a report.
According to Richard Shank, vice president of innovation at market research firm Technomic, price has surpassed traditional factors such as quality, service and portion size for the first time this year to become the leading driver of perceived value in restaurants. Bloomberg Reports.
This marks a significant change from previous years, when price was fourth on the priority list, Shank said. It also means that once health-conscious consumers can opt for McDonald's newly revamped value menu instead of Sweetgreen, which once sold salads for $17, according to the outlet.
The fast food industry has long relied on discounts to attract budget-conscious customers. McDonald's has seen success with offerings like the $5 Sausage McMuffin with Egg Flour and the $8 Big Mac Meal, while Burger King's $5 and $7 meal deals are also resonating strongly with price-focused diners, according to executives at both chains. Bloomberg information.
Some consumers who previously bought fast-casual salad bowls are now “switching” to fast-food options, seeking value without sacrificing convenience, the outlet reports.
Taco Bell's parent company, Yum! Brands has noted this shift, and McDonald's CEO Chris Kempczinski noted that the chain is increasingly attracting higher-income customers who still want affordable meals.
Data from market research company Circana supports this trend. David Portalatin, a food service consultant, said the share of lunches purchased at restaurants, cafes and other food service establishments remained stable at 23 percent during the three months ending in September.
This indicates that customers abandoning fast-casual chains like Sweetgreen may not be abandoning dining out entirely, but they could be switching to more affordable fast food alternatives.
Chains like Chick-fil-A and Taco Bell are well positioned to capture these customers, offering comparable options like crispy chicken salads or Chipotle-style bowls. In Manhattan, these meals typically cost around $11, making them competitive options for price-conscious diners looking for convenience and quality.
Another approach to balancing value and profitability is to adjust portion sizes. Earlier this month, Just Salad found success in Manhattan by reducing the price of one of its market plates from $14.99 to $9.99, resulting in more than doubling customers' usual purchases.
Similarly, Sweetgreen is exploring ways to attract more diners by reevaluating its pricing strategies. The chain introduced a loyalty program that offers occasional discounts, added some lower-priced seasonal menu items and in December launched a $10 entree.
To attract repeat customers, Sweetgreen may need to consistently offer lower-priced options, which could further strain the already thin profit margins typical of the fast-casual industry. Bloomberg suggests.
Adjusting portion sizes could work well with the growing number of people taking GLP-1 weight loss drugs.
Many “healthy” lunch dishes at fast-casual restaurants can exceed 1,000 calories, Bloomberg reports, which may be more than some diners want, especially those on medication. These smaller portions at a reduced price could appeal to these customers, providing better alignment between cost, calorie content, and perceived value.
