Before the recession, Andrew Puzder, who heads the Carl's Jr. and Hardee's burger chains, liked to joke about how sharp-priced competitors were "giving food away."
As the recession deepened and the number of 79-cent taco and 99-cent hamburger offers exploded, Puzder realized it was "no longer a joke; they are giving food away."
Literally.
On Monday, KFC gave away a free piece of its new grilled chicken just for the asking. And on Tuesday, most El Pollo Loco stores offered two pieces of chicken, two tortillas and salsa free upon request.
Welcome to the fast-food value war -- a battleground where $3, $4 or $5 will buy a hungry consumer a double burger, fries and drink combo, or entrees such as a pesto turkey sub, a grilled chicken burrito and more tacos than anyone but a teen boy could consume.
"The marketplace is contracting and all the brands are using value to get sales," said David Ovens, chief marketing officer of Taco Bell. The nation's largest Mexican fast-food company is a full participant, touting its "Why Pay More" menu of 79-to-99-cent items such as the Cheesy Double Beef Burrito and Triple Layer Nachos.
Rival El Pollo Loco has taken it one step lower -- 69-cent tacos, with a limit of 10.
Fast-food chains are chasing cash-careful customers such as Kevin Henderson of Monrovia, who was eating the new $4 Torpedo turkey sandwich at Quiznos in downtown Los Angeles on Friday.
"It's cheap, only four bucks, and I will get a cup of water to go with it. I don't eat out too often these days, but when I do I look for the best value," said Henderson, who works for Caltrans.
Quiznos and its competitors are responding to customers who are eating more at home, waiting for some attractive promotion or coupon before heading to the drive-through and skipping sodas and shakes when they do eat out.
Yet going after Henderson and other budget-conscious consumers is a risky proposition. Restaurants must adjust their menus to attract stingy consumers in a manner that doesn't erode their business, said Darren Tristano, a restaurant industry analyst at Technomic Inc.
"You have to manage a shift from high margin to high volume," Tristano said.
Puzder knows he must respond and is bringing back a 1/8 -pound hamburger that will sell for 99 cents to $1.29 at Carl's Jr., depending on the location, as well as Carl's chili dogs and Hardee's double cheeseburgers at two for $3. This isn't the way Puzder, chief executive of CKE Restaurants Inc. in Carpinteria, Calif., likes to do business.
