The news: Restaurants’ discount and promotion tactics aren’t delivering the lift they used to, recent earnings reports show.

• Applebee’s—which features promotions like a full-size appetizer and two entrées for $25 and half-off late-night appetizers—said comparable domestic same-restaurant sales fell 1.8% YoY in Q2.
• McDonald’s US same-store sales growth slowed to 0.8% over the same period, the weakest pace in more than a year—even after it introduced deals in April through its McValue menu, with items such as the Sausage McMuffin for $3 or less, plus bundled meals like a sausage biscuit, hash browns, and a small coffee for $4.

Why is this happening? Consumers are feeling stretched, and the nearly nonstop barrage of promotions makes them easier to tune out.

Elevated gas prices add to the pressure. The national average on August 5 was $4.08, 92 cents above a year ago, eating into consumers’ spending power and making them more mindful about when and where they eat out. That helps explain why QSR visits fell in four of the first five months of the year, according to Placer.ai. The data aligns with Black Box Intelligence findings showing that once average gas prices reach $3.50, restaurant traffic begins to decline.

Zooming out: While discount-focused chains struggled in Q2, Shake Shack, Chipotle, and Starbucks generated strong revenue growth, a sign that the restaurant industry’s winners are no longer those doubling and tripling down on promotions, but rather those that deliver differentiated offerings and a more compelling value proposition beyond price.

Shake Shack, which grew its same-store sales 3.5% and its overall revenues 17.2%, pointed to the premium ingredients used for its menu as a core differentiator. It said menu items such as its baby back rib sandwich and Dubai chocolate pistachio shake resonated with consumers. It is testing new chicken offerings as it aims to balance proven favorites with menu innovations.

That’s a similar strategy deployed by Chipotle, which attributed its strong results to its seasonal chipotle honey chicken and recently introduced cilantro lime sauce, as well as its rewards program. Chipotle raised its same-store sales growth forecast for the year after topping analysts’ quarterly earnings and revenue expectations. CEO Scott Boatwright boasted that Chipotle offers one of the strongest value propositions in the industry, as consumers know it offers “real food made from high-quality ingredients, prepared fresh every day” along with “generous portions, speed, and an accessible price point.”

Implications for restaurants and marketers: Discounts and promotions can still drive short-term traffic, but the more durable path to growth will come from restaurants that differentiate their offerings and execute well. McDonald’s, for example, cited execution challenges during the quarter.

The same logic applies to brands like Chipotle and Starbucks. When consumers splurge on a Chipotle burrito, they want generous portions and high-quality ingredients. When they order from Starbucks, they expect a wide range of seasonal beverages. By demonstrating that they offer something rivals do not, restaurants can give consumers a clear reason to choose them without needing a discount.