UPDATE 3-McDonald's, Wendy's dig in on deals in battle for diners

Wed May 8, 2013 4:10pm EDT
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* McDonald's U.S. April sales top expectations, helped by deals

* Wendy's Q1 restaurant sales fall short, loses ground on "value"

* Taco Bell promotes $1 food deals

By Lisa Baertlein

May 8 (Reuters) - McDonald's Corp, Wendy's Co and other U.S. restaurants are battling for the attention of frugal diners with coupons, limited time offers and other promotions - a fight that could intensify if the costs of chicken and other key ingredients remain less pricey than feared.

While prices for beef and other items are up due to last summer's historic drought, overall food costs remain relatively muted, giving restaurant operators "more ammunition to play the promotional and value game if they want to," said Edward Jones analyst Jack Russo.

Fast-food chains in the United States and other countries around the globe are struggling to increase traffic and sales as persistent economic weakness has taken a big toll on the low- and middle-income diners who are their chief customers.

McDonald's on Wednesday reported an unexpected 0.7 percent rise in April sales at established U.S. restaurants, helped by the national release of premium McWraps with discounted introductory prices, value food options and continued strength in breakfast items.

Still, the world's biggest restaurant chain by revenue is struggling to meaningfully boost sales after a long run of outperforming smaller rivals, which of late have been more nimble in introducing attention-getting menu items.   Continued...