Great ResignationInflationSupply ChainsLeadership

Del Taco launches $2 value menu to lure customers fed up with inflation

January 26, 2022, 9:22 PM UTC

Eggs that seem to cost a “bajillion dollars.” Gas prices feel like they’ve hit “$5,333 per gallon.” All that is certainly an exaggeration about the inflationary reality in the U.S., but it’s part of a new ad campaign by Del Taco that’s targeting Americans frustrated with rising prices. 

Del Taco, one of the largest Mexican quick service restaurant chains in the U.S., is touting a new $2 menu that’s populated with 20 items. “We get it [inflation]. And we got you,” the ad claims. The new menu consists of snacks and drinks that range from Chicken Tacos del Carbon and 3-layer queso nachos to mini milkshakes and donut bites.

“The latter part of last year, obviously inflation was hitting restaurant companies,” Del Taco’s Chief Marketing Officer Tim Hackbardt tells Fortune. “We immediately noticed that the majority of our competitors were beginning to abandon that value area. And we thought ‘Wow, that’s a really great opportunity for us because we know how to do that very well for consumers and with inflation.’”

Dollar menus have been on the decline at fast food chains for years, starting as early as 2013 with McDonald’s revamping its iconic Dollar Menu include items priced up to $5. During the pandemic, a number of fast food chains further cut back on their dollar menu offerings and some, like Wendy’s and McDonald’s, focused on pushing more expensive, gourmet burgers and family combos. At the end of 2020, for example, McDonald’s had quietly removed about eight cheaper menu items ranging from newer additions like the Little Mac to standbys like chicken tenders and salads, according to Business Insider.

Overall, the prices for food purchased by consumers while dining out in December have risen 6% over the last year, according to the Consumer Price Index. Meanwhile food prices overall are up 6.3% over the past 12 months.

Del Taco’s new $2 menu doesn’t exactly escape inflation—several of the menu items used to be on the chain’s $1 menu in 2020—but Del Taco also has a number of menu items under $2, including its classic snack taco that typically retails for $0.79 or $0.89, depending on the location. 

“Obviously every single restaurant company has their ingredients costing more. Being able to open it up to that $2 area allowed us also to bring in a lot of those quality components,” he says. The Tacos del Carbon, for example, not only include freshly grilled chicken and fresh cilantro, but also guacamole.

Del Taco’s wide variety of menu items is helping the chain navigate through the increased food prices, Hackbardt says. “For us, it’s a little easier because we can direct consumers and offer them options into things that may be a little more favorable for us. Like our bean and cheese burrito,” he says. The burrito—part of the 20 for $2 menu—is a bit more price stable because the price of beans hasn’t had a huge cost increase compared to prices for some proteins like beef. 

And while many fast food chains see their value menus as more of a traffic driver than a profit center for the businesses, Hackbardt says Del Taco sees profits in its $2 menu. “For us, it is a profit driver,” he says. Consumers tend to add these items onto their meal, so it actually drives a higher average check, which “then flows more dollars right into the overall revenue of the company,” Hackbardt adds. 

The new $2 menu is not a limited time offer, but rather a long-term update, Hackbardt says. “We look at this as an everyday value menu that the consumer can count on,” he added.

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