McDonald’s CEO Blames Affordable Groceries for Sales Drop – But Are Groceries Really More Affordable?

McDonald’s CEO has argued that it’s cheaper to eat at home, resulting in the restaurant’s lack of sales, but research suggests an increase in groceries by 1.3%.

Farewell to the Dollar Cheeseburger Era

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After a series of menu items increased in price, the days of the dollar cheeseburger are now a distant memory for most Americans.

McDonald’s Recent Criticism

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McDonald’s has come under recent criticism online after one post ridiculed an $18 Big Mac Menu and $6 hashbrowns.

CFO Admits Customers Are Put Off

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“We certainly know consumers are more wary or weary of pricing,” admitted CFO Ian Borden.

Impact of Price Hikes on Low-Income Customers

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McDonald’s CEO Chris Kempczinski said, “Where you see the pressure with the U.S. consumer is that low-income consumer.”

Low-Income Consumer Decrease

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“Call it $45,000 and under. That consumer is pressured. From an industry standpoint, we actually saw that cohort decrease in the most recent quarter,” he said.

Managing Price Adjustments 

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While prices increased by approximately 10% in 2023 to offset rising costs, the company witnessed a reduction in transaction size.

Eating At Home Argument

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Kempczinski attributed the loss in sales to more affordable home cooking, “eating at home has become more affordable,” he argued.

Real Cost of Eating at Home Revealed

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Despite this argument, research from the Bureau of Labor Statistics’ consumer price index revealed that the cost of eating at home rose by 1.3% in 2023.

A Focus on Affordability

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Looking ahead to 2024, McDonald’s plans to lure low-income customers back into its restaurants by prioritizing affordability.

A Promise to Reduce Prices

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“I think what you’re going to see as you head into 2024 is probably more attention to what I would describe as affordability,” Kempczinski admitted.

Restaurant Price Increases Surpass Grocery Stores

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In response to the surge in grocery store prices in 2022, restaurants experienced even more substantial price hikes in 2023.

Wendy’s Creeps Up on McDonald’s 

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Wendy’s, the fast-food chain that prides itself on affordability, has crept up on McDonald’s to become the country’s second most popular fast-food restaurant. 

Disparities Between Dining In and Dining Out

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According to the Bureau of Labor Statistics, the consumer price index reveals a 5.2% increase in food away from home, compared to a modest 1.3% rise in food consumed at home in 2023.

Inflation’s Impact on Fast-Food Chain

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As inflation begins to ease, McDonald’s fans can now anticipate a relaxation in the price increases.

McDonald’s Potential Price Hikes

Sankt-Petersburg/Russia - July 21 2019: McDonalds worker holding bag of fast food. Hand with a paper bag through the window of mcdonalds car drive thru service.
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Some experts, on the other hand, believe that McDonald’s menu prices in some states are about to increase even more.

California’s Labor Cost

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In California, the minimum wage is about to increase to $20, which could see a spike in McDonald’s prices to balance its cost of labor.

Chipotle In On Price Hikes

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After the minimum wage increase, McDonald’s and the popular Chipotle chain have admitted they will increase prices to balance the cost.

CFO’s Value Promise

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CFO Ian Borden said, “We continue to listen to our customers by evolving our value offerings despite these price hikes

Maintaining Affordable Prices

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Borden insisted that McDonald’s wishes to stay affordable by “maintaining strong perceptions in value for money and affordability.”

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The content of this article is for informational purposes only and does not constitute or replace professional financial advice.

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