Major burger brands such as McDonald's and Burger King are aggressively promoting discounts, even as beef prices have hit record highs.
Despite a sharp increase in beef costs—with wholesale prices for industry-standard ground beef rising 48% over the past 12 months—fast-food chains continue to offer discounts on burger products. Profits at large U.S. burger chains are under pressure, yet they persist with promotional pricing.
Federal data indicates that fast-food brands are grappling with surging beef expenses, while market research firm Circana reports that the proportion of Americans choosing discounted meal deals when dining out has reached its highest level in over 50 years.
The combination of heightened discounting and elevated costs is expected to further squeeze corporate profit margins. Last year, average per-store earnings at Burger King’s U.S. locations fell by approximately 10%. Jack in the Box stated last month that rising beef costs and weak sales have negatively impacted franchisee profitability.
“We won’t spend over $15 on a burger meal anymore when there are better options,” said Josh Fulps, a wealth management professional from Vancouver, Washington. The 28-year-old added that he always looks for deals on the McDonald’s app or opts for Wendy’s value meals when eating fast food.
Beef prices are projected to remain high as ranchers have reduced herd sizes to their lowest level in 75 years, with no immediate plans to expand production.
Since the beginning of 2024, foot traffic at fast-food restaurants has declined, prompting brands like McDonald's, Taco Bell, and Burger King to increase promotional activities. According to market research firm Technomic, U.S. burger chains launched roughly 3,000 promotions last year—nearly triple the number in 2019.
This year, discounting efforts have intensified. Insiders report that McDonald's will introduce new offers next month, such as a refreshed $3-and-under menu featuring a Double Cheeseburger, fries, or hash browns. This marks the chain’s fourth nationwide update of its value meal offerings in about 21 months.
McDonald's CFO Ian Borden stated in a February interview, “We will do everything we can to provide value to consumers while ensuring the business remains profitable.”
Data from the National Restaurant Association shows that the fast-food industry’s overall profit margin was 4% last year, down from 6.6% in 2016, due in part to rising labor and other operational costs.
Jim Lewis, a former McDonald’s franchisee with 32 years of experience who retired in 2019, noted that high sales volume may help McDonald’s locations manage the pressure, but intense discounting will worsen profitability challenges for other chains.
“Leading brands may hold on, but the entire burger category is under significant strain,” Lewis said.
A Burger King spokesperson said the brand will continue its current promotions—such as two items for $5 and three items for $7—aiming to offer flexibility across burgers, snacks, and desserts. “We are confident in the performance of these offers and their role on our menu,” the spokesperson added.
The company stated that new marketing initiatives and store remodels are helping franchisees improve profitability in a difficult environment.
Ryan Ostrom, Chief Marketing & Digital Officer at Jack in the Box, said the brand will introduce new promotions when appropriate, “rather than blindly following competitors.” Both Wendy’s and Jack in the Box emphasized that technology investments and operational improvements will help protect franchisee margins.
Over the past year, McDonald’s stock has risen 0.9%, while Burger King’s parent company, Restaurant Brands International, gained about 9%. In contrast, Shake Shack fell 1.8%, Wendy’s plunged 53.8%, and Jack in the Box dropped 64.4%.
Greg Creed, former CEO of Yum! Brands, parent company of KFC and Taco Bell, remarked that for discounts to be effective, they must attract more customers while allowing stores to remain profitable.
“The future of a brand depends on the financial health of its franchisees, not just the franchisor itself,” he said.
According to Revenue Management Solutions, promotional activity has helped slow the decline in customer traffic, though the most budget-conscious consumers have not fully returned. Technomic noted that the rate of foot traffic decline narrowed throughout last year, with December showing a year-over-year increase in visits.
Burger chains remain the largest segment in the U.S. fast-food industry, with total sales twice that of the second-largest category, chicken chains. However, chicken, coffee, and Mexican-style chains are growing at a faster pace.
Data from foodservice research firm Datassential shows that the number of burger restaurants in the U.S. has fallen by about 6% since 2019. Wendy’s and Jack in the Box together plan to close hundreds of U.S. locations.
Executives in the burger segment say that promotions such as buy-one-get-one offers and $5 meal deals can still generate profit for companies and franchisees—even at lower price points—since most U.S. chain restaurants are operated by franchisees.
Jim Lewis, the former McDonald’s franchisee, helped rally support for the chain’s Dollar Menu during a sales slump in the early 2000s. He recalled that foot traffic rebounded, leading to increased profitability.
“If you can drive volume, you can withstand a lot of pressure,” Lewis said.
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