It’s an economic principle called elasticity of demand. “A firm can increase its total revenue by lowering price if demand for the product is elastic – sensitive to price. For example, if the firm lowers price 5% and quantity sold rises by 10%, then demand is elastic and total revenue will rise.”

Smith points out that the fast food industry is a good place to watch this theory in action, as these kind of price wars often play out in markets that are oligopolies, where there are just a few big firms all vying to be top dog.

In the US, she says that around 40% of the field is occupied by the top handful of producers, “so it’s not surprising we’d see [pricing wars] in this type of market,” she says. In America, that top 40% already represents nearly $80 billion in revenue.

2018: Year of the value meal?



Right now, these big chains’ new value meals are US-only. But the gradual chipping away of costs for quick food isn’t a trend in North America alone.

While £1 meals aren’t commonplace in the UK, value meals are a growing trend that even higher-end supermarkets are interested in, such as, Marks and Spencer’s ‘Dine in for two for £10’ offer. Supermarket, Tesco, also offers £4 lunch specials that include a sandwich, drink and packet of crisps. While cheap items priced from £1.99 or £2.99 have helped drive sales at sandwich shops like Greggs, the bakery chain, the largest in the UK, which will open over 100 new locations in the next five years.