The “poor guy’s meal package” is available again, what are the brands trying to do?

This article introduces the frequent occurrence of "poor guy's packages" in catering brands, and also explains the reasons behind the brands' "losing money to gain publicity" and the difficulties they face. It is recommended for friends who are interested in the catering industry to read and watch.

On April 30, the one and a half month long "Half Price Friday" event in IKEA Canteen just ended. After a few days of holiday rest, the Poor Man's Meal started a new journey again;

On May 5, KFC launched a "designated burger coupon" including four burgers. During the promotion period, the unit price of each burger was only 9.9 yuan.

The next day, McDonald's, its old rival, announced a daily 10-yuan 2-piece super-value promotion. After receiving the coupon, McDonald's customers can order a variety of meal packages including hamburgers, snacks, desserts and single items. The promotion will last for two weeks. Thus, the two fast food giants have achieved a "victorious meeting" in the price range of 10 yuan or less.

The poor meal package, known for its cost-effectiveness, has become an important path for the catering industry to increase revenue, and has even spread to other fields such as furniture, cultural tourism, etc. There must be something wrong when things are abnormal. Excluding the possibility of charity, what do the merchants want to gain behind the poor meal package?

01 Simple business war: losing money to gain publicity

When talking about 9.9 yuan, we have to mention our old friend of workers - Luckin Coffee. In 2017, the coffee market in China was still dominated by Starbucks and others. Luckin Coffee suddenly emerged and occupied the market with large subsidies and almost free gifts. After a period of settling down after the financial scandal, Luckin Coffee re-emerged and started a long-term store celebration mode of 9.9 yuan per week. We don’t even know what it is celebrating. We only need to know that Starbucks’ coffee starts at 30 yuan, while Luckin Coffee only costs 9.9 yuan.

In 2018, to commemorate Thursday’s entry into the mainland market, KFC launched “Crazy Thursday”, where nine golden chicken nuggets could be purchased for 9.9 yuan. Three years later, “Crazy Thursday Literature” became an instant hit after being adapted by joke writers. With the speed of viral spread, as of press time, the topic “#KFCCrazyThursday#” has accumulated 3.08 billion views and 31.569 million discussions on Sina Weibo. In comparison, the topic “#KFC#” itself has only 660 million views.

On March 13, 2019, McDonald’s official Weibo account posted a post titled “Pair as you like 1+1=12”, and the Poor Man’s Meal “Unit-01” was officially launched. It only costs 12 yuan to choose one item from the red zone and one item from the white zone, bringing the price of the 20 yuan meal down to the 10 yuan level.

Just like the classic line in A Bite of China, "high-end ingredients often only require simple cooking methods." The confrontation between catering giants does not involve sending out commercial spies as in movies and TV series. The series of operations mentioned above are not out of sentiment, commemoration or charity, but in the simplest form of confrontation: losing money to gain publicity.

The success of the Poor Man's Meal soon attracted more and more catering brands to join in. From breakfast, lunch to dinner, and even dessert, they rushed to occupy a certain day of the week, and even the naming ideas were somewhat surprisingly similar - "XX week X".

Tustin Burger launched "Tuesday Membership Day", during which buy one burger get one free, and two burgers can be purchased for 15 yuan; Burger King launched "Wednesday King's Day", replacing McDonald's red zone and white zone gameplay with A zone and B zone, and the 1+1 meal was reduced to 9.9 yuan; Pizza Hut launched Screaming Wednesday, and the nine-inch pizza was reduced to 29.9 yuan; Nanchengxiang, a Chinese fast food restaurant that caters to all ages, also joined in the battle with a number of foreign fast food restaurants. The 3 yuan buffet breakfast and the 19.9 yuan unlimited vegetarian hot pot buffet have become "poor guy's meals that are more suitable for the physique of Chinese babies."

From now on, from Monday to Friday, we are surrounded by the "poor man's meal".

02 Behind the price drop: declining financial reports

While "Crazy Four Literature" brought huge traffic to KFC, offline stores also got a share of the pie. Take a KFC restaurant in Beijing as an example. On weekdays other than Thursdays, the waiting time during the dinner peak is about 3 to 5 minutes, while the waiting time on Thursdays is 30 minutes. The store was so crowded that it was even forced to close the online ordering entrance to relieve the pressure of preparing meals in the kitchen.

According to the normal development of the script, Crazy Thursday's breakthrough should have driven KFC China's profit growth, but the results shown by Yum China's first quarter financial report for fiscal year 2024 released on April 29 were just the opposite. Although the operating income of US$2.958 billion increased by 1.41% compared with the same period last year, the net profit of US$287 million decreased by 0.69% year-on-year.

Luckin Coffee is also in a state of "bleeding". The first quarter financial report of Luckin Coffee for fiscal year 2024 released on April 30 showed that Luckin Coffee's revenue for the period was 6.28 billion yuan, a year-on-year increase of 41.5%. A significant increase in revenue over the same period does not mean profit. Luckin Coffee had a net loss of 83.2 million yuan in the first quarter, while its net profit in the same period last year was 564.8 million yuan. In addition, as of March 31, Luckin Coffee's cash reserves had dropped from 3.8 billion yuan at the end of 2023 to about 2.4 billion yuan.

Revenues are growing, but profits are falling. The poor economy is not easy to maintain. Every successful marketing campaign achieved when prices are cut will be rewarded with crisis public relations when the company can no longer sustain the trend and wants to reduce benefits.

McDonald's "poor man's meal" has increased in price twice within five years of its launch, from 12 yuan to 12.9 yuan, and then from 12.9 yuan to 13.9 yuan, approaching the 15 yuan mark. Each price increase has touched the sensitive nerves of the "poor men". Many netizens said that the poor man's meal was the last motivation for them to enter McDonald's. The successive price increases made them feel betrayed. Faced with overwhelming condemnation on the Internet, McDonald's had to blame the pandemic: "Due to the continued impact of the epidemic on various costs, starting from January 4, 2023, the prices of some items and meal packages for dine-in and McDelivery will be adjusted, and the actual prices have been clearly marked and displayed on various ordering channels." Just like the occupied physical education class will never be made up, now that the epidemic has become history, the price of the poor man's meal will never be reduced after the increase.

Faced with the siege of Kudi Coffee, which was priced at 9.9 yuan everywhere, Luckin Coffee quietly began to "back down".

As early as March 2024, many customers reported that Luckin Coffee's "9.9 yuan per week" coupon activity had shrunk. The 9.9 yuan coupon that was previously valid for all beverages had quietly shrunk to only eight designated beverages. After entering May, Luckin's 9.9 yuan coupons had shrunk to five to six designated beverages. In terms of the range of available stores, affected by the decline in single-store revenue capabilities and rising operating costs, some Luckin stores have withdrawn from the 9.9 yuan coupon activity. As of press time, the topic "#Luckin's 9.9 yuan activity shrinks again#" has received 110 million views and 15,000 discussions on Weibo.

The "believers" who were crazy about Luckin Coffee back then have now turned against it and become comedians: "From raw coconut velvet latte to a choice between raw coconut and velvet, and now only latte, it won't be reduced to just 'latte' in the future, right?" The glory of promoting 10,000 stores for 9.9 yuan per week is no longer there. In response, Luckin Coffee chose to take the cold approach, using silence to let consumers slowly accept the fact that benefits have been reduced.

03 New Problem: It is easy to reduce prices, but difficult to increase them

The essence of the poor man's package is actually a price war, that is, to suppress competitors, occupy more market share and digest inventory by lowering the market price of goods.

From a marketing perspective, we can analyze the entire process of the launch and reduction of the Poor Man's Meal. Since its inception, Luckin Coffee has lowered the average customer spending on freshly ground coffee by killing one thousand enemies and hurting eight hundred of its own. It has snatched a large piece of cake from Starbucks by igniting itself and illuminating the "poor man". McDonald's has lowered the threshold for eating foreign fast food with its "1+1 as you like" meal at 10 yuan. IKEA, which focuses on the furniture industry, chose to start a discount mode in the IKEA cafeteria after seeing the stagnation of the furniture market: every Friday during the event period, the discounted cone is only 1 yuan, and the special flavor is 3 yuan. In addition, the rest of the meals are fixed at 9.99 yuan, in order to use the Poor Man's Cafeteria to attract traffic to its main business.

Price reduction is popular among consumers and is one of the most effective means. The merchant's marketing team does not need to spend too much time thinking. They just need to tell consumers in the simplest and most straightforward way - "We have reduced prices", and then distribute coupons to consumers. When they see that the brands that they usually have to consider before eating and drinking have dropped to the price of street snacks, they will naturally vote with their feet.

It is easy to go from frugality to luxury, but it is difficult to go from luxury to frugality. The operating mode of the poor package is to pay close to the operating costs or even lose money. Price reduction can indeed attract a lot of traffic for the brand in the short term, but if you want to achieve positive growth in brand profits, you obviously can't just rely on the poor package. The difficulty lies in how to realize the traffic brought by the poor package, or more bluntly, how to raise prices openly after losing money to gain publicity.

The impact of the long-term price war is the change in the price anchor point in consumers' minds. Luckin Coffee has long controlled the market price of its freshly ground coffee at 9.9 yuan by issuing coupons. In conjunction with the price war launched by competitors such as Kudi, consumers have deeply associated the words freshly ground coffee with 9.9 yuan. That is, if you drink Luckin Coffee, anything over 9.9 yuan is considered expensive.

Once the price anchor is set, it is difficult to change. Without the 9.9 yuan coupon, will consumers still buy Luckin? Perhaps they just need a cup of coffee to sustain their study or work. Without the 9.9 yuan Luckin, there are still the 9.9 yuan Kudi and the 8.8 yuan Lucky Coffee. The poor meal attracts "loyal believers" or "white clouds" who are looking for free food. When brand owners announce a reduction in benefits or a price increase for their product lines, the answer is already known.

Author: yihao chen; Source public account: Morketing (ID: 1083455)