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Steak ’n Shake Freeze Signals Industry Jitters

Filed under Advertising, Marketing, Pricing, Trends/Forecasts

Operators already are expressing uneasiness about consumer confidence, spending and inflation in the year ahead. And it’s only Jan. 3.

After a year in which most operators were forced to raise menu prices to balance rising food prices, Steak ‘n Shake today announced it has frozen its prices for 2012. It’s a 52-week-long promotion! The preemptive tactic assumes that consumers will be increasingly budget–conscious in 2012, as suggested by CEO Sardar Biglari in a statement: “Steak ‘n Shake has an extremely strong value proposition that resonates with consumers. During 2012, we have no intention of raising menu prices, especially because we are attempting to insulate our customers from inflation while continuing to provide the finest in burgers and shakes.”

Steak ‘n Shake’s action is one of several recent price-reduction indicators that indicate operators see continued depressed—if not depression—economic conditions ahead in 2012. Among others:

McDonald’s is again promoting its Dollar Menu nationally, and at least one region (Northern California) is offering free coffee. “In this challenging economic climate, we know that many are struggling to make ends meet and this is our way of lending support during these difficult times,” McDonald’s operator Steven Ramirez says in release announcing the program.

● Carl’s Jr. and Hardee’s have just concluded a “12 Days of Happy” promotion (at right)that offered a different discount daily from Dec. 22 to Jan. 2.

● Wendy’s is promoting its My 99¢ value menu, to which it has added an improved Jr. Cheeseburger.

● Sonic begins the year with a traffic-building promotion offering addition of chili-cheese topping to any item and featuring a Chili Cheese Coney, Jr. Chili Cheeseburger and Chili Cheese Tots for just $1.99. White Castle is into chili, too, adding Chili Cheese Fries and Angus Steak Chili. And on the West Coast, Wienerschnitzel has brought back its 99¢ Original Chili Dog for a limited time.

Fears about a tough sales year ahead aren’t restricted to the U.S., either. London-based foodservice researcher Horizons says “the UK hospitality sector faces its biggest challenge yet as 2012 brings a fourth year of retrenchment.” Even this summer’s Olympic Games won’t provide much of an uplift for foodservice, Horizons Managing Director Peter Backman predicts, since “operators outside the Olympic venues could see visitor numbers drop.” Read the report here.

2 Responses to Steak ’n Shake Freeze Signals Industry Jitters

  1. Matt

    That’s crazy (and awesome) on Steak ‘n’ Shake’s part. They just opened their first location here in Colorado around Thanksgiving and it still is ridiculously busy every day. The first two times I went there my order was wrong, but the food was still good. The service time needs to improve or I won’t return. But still kudos on the gutsy decision to keep prices where they’re at.

  2. Dan Muckler Jr.

    I think it’s a smart move in this economy; best products out there, period.