The War on McDonald's Prices: Losing Customers to Affordability
McDonald's has recently been the target for customers complaining on social media about the high prices for menu items.
As the franchise grew and more menu items were introduced such as the Big Mac in 1967, it became more difficult to utilize this system because they we're no longer making identical burgers for every customer like they were in the early days.
Competitors were also seen opening new locations and expanding to more customers, but for many years McDonald's was still proving to be the real King.
That is up until recently. With McDonalds new price rises, they may have gone too far. and it's starting to have some noticeable consequences that could potentially be the end to the Reign for the fast food empire.
The biggest McDonald's price spikes occurred in the 2000's, but even in 2002 a big mac meal was only $3.99 in the US. By 2013 the Big Mac meal had jumped to a whopping $6.19, still substantially cheaper then todays price, with a median household income at the time of $52,250.
In 2019 the Big Mac meal was averaging to be $7.49 and the menu still even included more affordable options like the $1 2 3 menu and $1 drinks. This could arguably be the best years as well, because they introduced all-day breakfast.
Which they took away in 2020...
2023 was when these price changes really became noticeable. The average Big Mac meal now sitting around $13. We also no longer see $1 drinks, or any sort of "dollar" or "value" menu. And with prices varying by location, we started seeing some big mac meals as high as $18.
The household income median by the end of 2023 was now $75,143. But things like rent and the cost of homes skyrocketed, along with those other living necessities.
Focusing specifically on renters, the average rate of increase per year is 3.2%. But according to rent.com, from 2020 - 2023 we saw a record high of 26.3% in just those 3 years.
But how is this any different then before, and how is it effecting McDonalds at all?
The burger chain reported weaker-than-expected sales at its US stores, causing CEO Chris Kempczinski to finally address this McDonald's "affordability" problem. He indicated the chain would cut prices on some menu items, but nothing actually confirmed.
These Prices are no longer rising as much, but they still remaining high with no end in sight, and many Americans feel the economy is weak in its current state. Because of that it's putting a lot of pressure on lower-income families, which is a vital consumer base for the chain.
Kempczinski said that customers making $45,000 or less - "decreased in the most recent quarter,".
He mentioned that there is a chance we could see a decrease in the cost, but there's no details on the timing or size of any price cuts so I wouldn't count on it anytime soon.
The public's response has ripped through the internet like a wild fire. These once loyal customer are now publicly calling out McDonald's, who are becoming a frequent target on social media for complaining about high food prices. Viral stories express frustration at the cost of a Big Mac meal - particularly the $18 one at the popular Darien, Connecticut, location off I-95 - along with other menu items.
In the end, who knows if they will even commit to lowering prices. From what the CEO was stating about Their wealthier customers being undeterred, we could see McDonald's pushing more to become a higher-brow fast food chain targeting that demographic. Leaving their customer base that built their empire in the dust.
⌛ Outline:
00:00 Introduction
00:51 Chapter 1: Brief McDonald's History
01:58 Chapter 2: Economics of Past Price Rises
04:38 Chapter 3: Recent Rises and Effects on McDonald's
07:12 Chapter 4: Customers Response
08:12 Chapter 5: Future of McDonald's Prices
09:37 Outro
~~~~~~~~~~~~~~~~~~~~~~~
Sources:
1. https://www.cnn.com/2024/02/06/busine...
2. https://en.wikipedia.org/wiki/Critici...
3. https://californiathroughmylens.com/o...
4. https://www.mashed.com/1291057/mcdona...
5. https://www.eatthis.com/big-mac-cost/
6. https://www.statista.com/statistics/2...
7. https://www.cnbc.com/2024/02/05/mcdon...
8. https://www2.census.gov/library/publi...
9. https://corporate.mcdonalds.com/corpm...
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