The recession that brought back $2 gasoline is about to bring back to casual dining another retro price point: $5 meals.
On Monday, T.G.I. Friday's — which, like most casual-dining chains, has taken a hit during the recession — will unveil plans to sell all salads and sandwiches for $5 all day in May. The move follows a recent rollout by Chili's of 10 entrees for less than $7.
A $5 price tag at sit-down restaurants hasn't been seen in quite awhile. "It's a magic number," says Malcolm Knapp, a researcher who tracks the $75 billion casual-dining industry, which saw same-store sales drop 4.9% in March. The $5 meal, he says, "is affordable to everyone."
The question: Can Friday's afford it? A steak sandwich that usually fetches $11.75 will go for $5, as will a pecan-crusted chicken salad, normally $9.69. All are full-size portions. The chain hasn't had such low prices on its menu since it opened in 1965.
Friday's executives insist that beyond being a recession response, the $5 menu is a way to drum up interest in nine new salads and sandwiches. "The consumer needs something that gives them permission to experiment — and this is it," says Andrew Jordan, marketing chief at Friday's USA.
The move comes a year after Subway rolled out $5 foot-long subs, an industry game-changer viewed as one of fast-food's most successful promos. Friday's $5 move comes as consumers continue to abandon casual dining for cheaper spots such as Panera Bread, Wingstop and Subway.
The restaurant industry has seen same-store sales decline for nine consecutive months, with casual dining taking the biggest hit. While some chains project signs of better times ahead, most are still mired in the doldrums.
"The $5 threshold reinforces the idea of a deal," says Ravi Dhar, director of the Yale Center for Customer Insights. "That's the current consumer mindset."
Others with $5 meal deals:
• Subway. Since launching the $5 foot-long deal in 2008, Subway has posted double-digit same-store growth, says Tony Pace, marketing chief at the Subway Franchisee Advertising Fund Trust, the marketing arm of Subway. The move has been widely mimicked, including by Quiznos, which undercut the deal to $4.
While Friday's will lose money on $5 meals, Subway makes money on the subs, he says. "My guess is, they know some of their customers have migrated to us."
• Boston Market. Boston Market, which started promoting its $5 menu in August 2008, has made it the focal point of its menu boards, says Judy Cantrell, chief brand officer. In a recent survey, 90% of guests said it motivated them to come more often.
• Shoney's. When CEO David Davoudpour took over in 2007, he brought back the $4.99 breakfast bar. But $5 meals won't work in casual dining, he says. "When you sell for $5 what you should sell for $10, something's wrong."