Fast-food war: fight for customers driving down prices

The fight for customers is driving fast-food prices lower, but industry associations say it is unsustainable.

Burger King is currently offering a 9-pack of chicken nuggets for $2.95 and a cheeseburger 'Stunner Meal' for $5, while competitor McDonald's offers a cheeseburger and chips option for $4, and KFC a $3.90 snack box.

First Retail Group managing director Chris Wilkinson said fast-food operators were moving away from using occasional promotions.

"Moving away from occasional promotions to the concept of everyday better pricing is definitely an aspiration — but not always achievable or sustainable, when competitors retain dynamic pricing models that are influenced by market-share, seasonality and other factors," Wilkinson said.

"Fast food operators tend to use 'door-buster' deals to drive up traffic and sales when making a play for off-peak-spending or market share. A good example of this is the price promotion quick-service restaurants are doing around lunchtimes — which is becoming an increasingly crowded marketplace."

Restaurant Association of New Zealand general manager Nicola Waldren said she did not see low prices as anything out of the ordinary.

"It may be that there's a short-term battle going on amongst larger fast-food chains but that's potentially something that is happening regularly as well," Waldren said.

"We don't think it is sustainable keeping those low prices long term but the larger chains always do loss leaders."

A spokesman for McDonald's said value was important to the fast-food operator, but was not always determined by price.

"Value is at the heart of the McDonald's brand and something our customers expect from us. Whether it's a combo meal, snack bundle or a ShareBox, we look to offer great value across our menu," the spokesman said.

"Value isn't always price driven. For example, we offer table service in our restaurants, and McCafe at Drive-Thru continues to be popular, delivering a proposition customers value."

Burger King declined to comment on why it offered low prices.

New Zealand Food & Grocery Council spokesman Brent Webling said $2.95 for a 9-pack of chicken nuggets was "a pretty expensive way to buy chicken".

A kilogram of chicken nuggets could be bought for between $10 and $13, he said.

Restaurant Brands, the owner of KFC, Carl's Jr and Pizza Hut, has been approached for comment.