Fast-food cheap deals aren't enough anymore: Why McDonald's, Wendy's are struggling while Taco Bell wins

US fast-food chains are learning that cheap deals alone may not be enough to bring customers back, as budget-conscious diners become more selective about where they spend their money.

The second quarter results of major restaurant chains showed that discounts worked best when they came with better food, new menu options and a smoother customer experience. Chains that relied mainly on promotions continued to struggle, according to a report by Reuters.

Taco Bell finds the right mix

Yum Brands' Taco Bell was among the chains that managed to attract customers looking for affordable meals without heavily discounting its entire menu.

Its $5, $7 and $9 meal boxes proved popular, while new menu items helped encourage customers to spend more than the price of the entry-level deals.

Taco Bell reported a 7% rise in same-store sales during the quarter. By comparison, global comparable sales at McDonald's rose 1.3%.

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Rachel Royster, director of strategic planning and innovation at foodservice consultancy Connections, said value works when customers can easily understand what they are getting.

Value succeeds when it is "really clear and simple" and does not feel like a "bait-and-switch", Royster said.

McDonald's struggles despite cheap deals

McDonald's had several low-price offers during the quarter, including its under-$3 menu and a $4 breakfast meal. But the deals did not do enough to bring back customers.

CEO Chris Kempczinski said loyal customers accounted for about two-thirds of the traffic shortfall and blamed execution rather than strategy.

The results suggest that lower prices may not be enough when customers are also looking for better food, service and overall value.

Wendy's, Wingstop see pressure

For some chains, promotions failed to offset pressure on lower-income customers.

Wendy's, which offers Biggie Bag value meals starting at $5, reported a 7% drop in U.S. same-restaurant sales and withdrew its annual forecast.

Wingstop also struggled despite promotions that included $1 chicken wings. Its U.S. same-store sales fell 7.5%.

Wingstop CEO Michael Skipworth said sales were weaker in urban areas, where households typically faced more financial pressure. In higher-income markets, however, visits climbed as much as 9%.

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Wingstop's stock has lost more than three quarters of its value in the past six months.

Matt Curtis, an analyst at D.A. Davidson, said customers are becoming more careful about comparing restaurant offers.

"While increased noise created by competing promotions may have made it harder for consumers to make that determination, they appear to have also become more sophisticated in how they evaluate the various tradeoffs and cut through the noise," Curtis said.

Burger King shows discounts can still work

Not every chain needed to offer the lowest prices to attract customers.

Restaurant Brands' Burger King was among the stronger performers. The company credited promotions such as its "2 for $5" and "3 for $7" offers, along with wider efforts to improve operations and menu quality, for strong U.S. sales growth.

Independent restaurant consultant John Gordon said Burger King has avoided relying on deep discounts every day.

"Burger King is doing discounts but not all the time, and when they do, they make it creative," Gordon said. "They're not doing this insane, everyday, deep discounting."

Convenience and loyalty also matter

Domino's Pizza benefited from value-focused offers and loyalty programmes, which helped bring more customers in and support sales.

Chipotle also posted strong results while keeping price increases limited to about 1% to 2%.

Chipotle CEO Scott Boatwright said restaurants need to look beyond price when trying to offer value.

"Value isn't just about discounting and price point. It's about convenience. It's about execution. It's about menu innovation," Boatwright said.

The latest results point to a shift in the fast-food market: customers still want affordable meals, but the cheapest deal does not automatically win. Restaurants are increasingly having to combine price, food quality, convenience, new products and better service to keep diners coming back.