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.](https://www.fromfrugaltofree.com/wp-content/uploads/2023/12/McDonalds-drive-thru.jpg)
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 post McDonald’s CEO Blames Affordable Groceries for Sales Drop – But Are Groceries Really Affordable? first appeared on From Frugal to Free.
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The content of this article is for informational purposes only and does not constitute or replace professional financial advice.