The CEO of McDonald’s has revealed that low-income customers making less than $45,000 per year have largely stopped ordering from the fast-food giant as prices for menu items continue to skyrocket. The cost of a Big Mac combo has risen to nearly $18 at some locations, leading to customers being driven away due to inflation. This has led to global same-store sales growing just 3.4%, falling short of the 4.7% growth that Wall Street had expected.
The rising prices of fast food have been attributed to increasing commodity costs and the upcoming implementation of minimum wage hikes across the country. McDonald’s franchisees also claim they are being financially squeezed by rising costs of insurance, equipment, and labor. Despite concerns over the company’s increasing prices, the CEO hopes to slow its price increases to a “low single-digit” pace in 2024, with a focus on affordability and targeted promotions on the McDonald’s mobile app.
It is expected that fast-food prices will continue to rise, particularly with increased minimum wage laws being put into place. However, McDonald’s is aiming to optimize its prices while mitigating customer resistance, possibly through the use of targeted promotions and smarter pricing methodology. In a time when affordable fast food is becoming increasingly unattainable, it remains to be seen how McDonald’s and other fast food chains will navigate these challenges.