Not so sure of that.

If you buy 30,000 pounds of quality meats,a substantial discount is more than likely;so ,the MORE that is bought,the more the discount!What supplier would'nt want to sell such a massive quantity of product-meat or otherwise?Ask the people who supply Disney-I can assure you,they are making big bucks,and Disney is saving big bucks!

As for our family of 4,We love FD!The TS meals especially are just part of the whole experience.We have done 10 nights x3 during FD,and are'nt tired of it yet.The thing with us is,and many others,is that we have to eat,but don't have to sleep in "deluxe"quarters.So FD is the better deal to us!
Another thing to factor in from Disney's point of view is the cost to operate a resort room for the night is a fixed expense. So if you are paying rack rate for the room, you are giving them a nice solid profit that they can afford to offset with the food giveaway. They will have a certain profit percentage point in mind and then use room discounts or dining discounts as a tool to bring people in above that point.
For example, let's say the fixed cost of the room is $75 per night at a moderate with a rack rate of $300. Let's say they want to receive a $75 profit per night. They need to bring in at least $150 per night on the room to hit their profit target. For this example, let's say dining is $140 for two adults and two children.
For FD, the guest will pay rack rate, but get the dining free, so they pay $300 per night, well above the profit minimum. They appear to have received a $140 per night discount, but Disney is getting $150 over their profit minimum, so Disney is still ahead.
If the guest gets a 30% off code, they pay $210 per night, still above the profit minimum even before any OOP dining is added. If they pay $30 per person per day for OOP dining, that's an additional $120 per day, for a total of $330, so again, Disney is well above the profit minimum they have set.
Obviously, these are all estimated numbers, as we do not know what Disney's per room cost is and I am generalizing rates for rooms and dining plans. But you can bet Disney isn't doing anything that is going to jeopardize their bottom line. Even the remarks about weaning us off discounts just promote an urgency to travel now before the prices go up!
We book FD or any other promotion when we feel it's a good value for us. Disney offers those promotions because it brings in profits for them. Under the right circumstances, it's a win-win for both. I do believe that
free dining has affected what the restaurants offer, if only because they attempt to flatten out the cost of the meals instead of offering a wider variety of items. But I don't think the quality has suffered yet to the point that people will stop buying (whether OOP or DDP) completely. It does seem that we continue to see an increase in negative comments about food choices and quality though, and at some point there will have to be a change.