How High Prices, Shrinkflation Is Reshaping Fast Food Industry

The pinch of high prices fueled by inflation and a labor shortage has been affecting countless industries, forcing companies to rethink how they serve their customers, and the fast-food industry is no different. Restaurant chains have been forced to not only raise prices to combat their own higher costs but use their own version of shrinkflation as they rethink their offerings.

According to CNBC, by raising prices, offering smaller portions and beefing up rewards programs, the fast-food industry is rethinking the value strategy that they have been known for.

"We've seen companies tweaking their value menus across the board," Michael Schaefer, global lead for food and beverage at Euromonitor International told CNBC. "We're seeing fewer items total, limited price increases, smaller items."

Various restaurants that have done this include Domino's, which raised the price of its Mix & Match delivery deal to $6.99 earlier this year and made the national carry-out offer for $7.99 available only for digital orders. They also cut their boneless wings from 10 pieces down to eight. Burger King took its Whopper sandwich off the value menu and trimmed the 10-piece nugget to become an eight-piece meal instead.

Subway sandwiches have also been affected by shrinkflation, offering less meat on their popular subs to cut costs.

However, while they may be offering less actual food, the companies are looking for ways to inspire customer loyalty, with most chains now offering some rewards programs or mobile app offers that not only bring consumers back but also allow them to offer personalized deals, which give consumers what they want and also saves the restaurants money, whereas national promotions tend to lose them money.

Chains that offer some form of a rewards program now include McDonald's, Chipotle, Chick-fil-A, Dunkin' Donuts, Papa Johns, Wendy's and Burker King.

Offers from the apps vary as well. McDonald's app users get a free order of large fries and 1,500 bonus points just for downloading and signing up for rewards. That 1,500 points can then net a free McChicken Sandwich, Hash Browns, Vanilla cone or classic cheeseburger. At Wendy's and Burger King, users earn 10 points for every $1 they spend, which they can then use to get free food and other perks.

The strategies seem to be working though, as Burger King parent company Restaurant Brands International has seen consumers redeeming more coupons and using loyalty program rewards as they try to combat the higher menu prices they've faced.

"It suggests people are looking for good value for money," Restaurant brands International CEO Jose Cil told CNBC.