Fast-food chains like Taco Bell, McDonald's, and Chipotle keep introducing more expensive menu items — customers are eating it up

• Executives at Taco Bell, McDonald's, and Chipotle each noted success from pricier menu items recently.
• Customers are visiting value chains and splurging on more premium options.

Fast-food chains are investing in pricier menu options, and customers keep buying them despite worries over inflation.

Executives at chains across the quick service landscape, from McDonald's to Chipotle, explained the success they've had with products on the higher end of their price range.

Demand for Chipotle seems resistant to price increases, according to financial results in October. Sales continue to grow faster than price increases, up 14% in the third quarter over the same period in 2021.

"We're not seeing people all of a sudden not buying guacamole," CEO Brian Niccol told investors in an earnings call Tuesday. Most customers aren't changing their regular orders or switching to less expensive proteins, he said. "Things have stayed pretty consistent."

Customers ordering these more expensive options are good for Chipotle's bottom line.

Adding guacamole in New York City costs $2.95, more than an additional 25% increase on the base price of a chicken burrito at $10.95. Premium proteins can also drive up sales. The limited-time garlic guajillo steak is 16% more expensive than steak and barbacoa on average, and nearly 40% more expensive than the cheapest option, chicken, on average according to an analysis from William Blair equity research shared with Insider.

McDonald's reported high sales thanks to its adult Happy Meal promotion in October, which was a standard Big Mac meal plus a vintage-inspired toy and an upcharge of up to $2.60. McDonald's CEO Chris Kempczinski called the promotion a success "that reengaged our fans to our core food," with 50% of all collectibles sold out within the first four days.

The more expensive meal promotion successfully brought customers in, and "drove the highest weekly digital transactions ever in the US business," Kempczinski said in the October earnings call.

Taco Bell is seeing similar success with pricier menu items like the grilled cheese burrito, YUM Brands CEO David Gibbs said in a November earnings call. Customers are showing a preference for "premium value" menu items like the Mexican Pizza and double steak grilled cheese burrito, Gibbs said, because they are "a higher price point than normal [Taco Bell items], but still a great value," compared to other dining options.

In New York City, a Mexican Pizza costs $6.49, and a double steak grilled cheese burrito goes for $6.79, about double the cost of lower-priced burritos on the menu.

Analysts have praised both the grilled cheese burrito and adult Happy Meal as smart strategies driving sales.

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