retail news in context, analysis with attitude

The Los Angeles Times has a story about the current Southern California fast food wars, reporting that they are taking place on two fronts - price and innovation.

"The swarm of new deals are a symptom of seismic shifts in the fast-food industry," the story says. "Pizza Hut recently introduced a $5 menu that includes chicken wings and pasta, while Burger King started selling a five-item meal for $4. McDonald's launched a 'McPick 2' deal in which diners can pick two items for $2. Last year, Wendy's led the pack with a new four-item combo for $4." What this all means is that fast food chains are looking for any and all price/value advantages in a crowded marketplace.

At the same time, the chains seems to know that greater innovation will be the best way to ingratiate themselves with consumers, especially young people who are looking for new flavors and trends.

The story notes that "Burger King has rolled out an extra-long Sriracha cheeseburger and Wendy's has tried ghost pepper fries, both in an attempt to capture adventurous millennial diners. Wendy's opened a research center aimed at testing new technologies, while Dairy Queen has debuted a lab to create higher-quality products."

But these initiatives can be challenging for companies with legacy systems and "entrenched supply chains," which gives younger companies - the Times cites Chipotle, Panera and Five Guys - an advantage because innovation seems more baked into their DNA. And now, the Times reports, "in burger-studded Los Angeles, the battle is heating up as Shake Shack, an East Coast favorite, opens its first California location in West Hollywood this year."
KC's View:
This is emblematic of the broader battle for consumers - there is a price/value that retailers can drive on, and a quality/innovation lane. It is very hard to straddle them, offering both prices and innovation ... though there are consumers out there who want both. Finding the balance is tough, but critical, in creating mass appeal and a sustainable business model.