Link

Attached File


SAN ANTONIO, Texas March 27 (Reuters) - Runaway prices at U.S. fast-food joints and restaurants have made people skittish down the income ladder and executives at chains including McDonald's (MCD.N), opens new tab and Wendy’s (WEN.O), opens new tab recently said they worry about losing business from those on the tightest budgets.

Roughly a quarter of low-income consumers, defined as those making less than $50,000 a year, said they were eating less fast food and about half said they were making fewer trips to fast-casual and full-service dining establishments, according to polling in February by Revenue Management Solutions, a consulting firm.

The rising price of food is contributing to budget-conscious diners cutting back.

Whether consumed at home or in a restaurant, food prices rose 20% from Jan. 2021 to Jan. 2024, the fastest jump on record. A recent census Household Pulse Survey showed half of people earning less than $35,000 a year had difficulty paying everyday expenses, and nearly 80% were moderately or “very” stressed by recent price increases.

Lauren Oxford, a musician who works part time at a bed-and-breakfast in Tennessee, said she used to stop by McDonald's after running errands, treating herself to two double hamburgers, fries and a drink, for less than $5. As prices rose, she switched to smaller hamburgers and stopped getting the drink.

But after a year in which McDonald's franchisees drove prices up about 10% according to the company's executives, she’s going to McDonald's less in general. “Now I don’t know if I can justify that.”

In the Fed’s most recent Beige Book compendium of anecdotal reports gathered from business and community contacts around the country, 7 of 12 regional Fed districts reported low-income consumers were changing spending habits in search of bargains, seeking more help from community groups, or struggling to access credit.

About one-third of Black American households, and 21% of white American households, earned less than $35,000 in 2022, according to the latest available U.S. census data.

Attached File


For fast-food companies that often promote an image of affordability, low-income consumers are a significant portion of the customer base and a bellwether for longer-term trends. But they are typically the first to cut back spending and the last to come back.

But now, chains may be less likely to chase customers as hard as they have in the past because even with a drop in traffic, sales have remained consistent supported by increased prices.

Fast food companies aren't "in a hurry to take traffic over profit the way they were a decade ago,” said Mike Lukianoff, CEO of SignalFlare.ai and a veteran consultant in the fast food industry.

For example back in 2008, Subway introduced its nationwide $5 footlong, which became the poster sandwich for the Great Recession. That spurred rivals to introduce extreme value deals for budget-conscious customers, such as “$5 Fill-Up Boxes" at Yum! Brands (YUM.N), opens new tab KFC.

In 2016, McDonald’s, after a prolonged slump in sales, introduced a bundle deal it called “McPick 2”, allowing customers to choose 2 items, like a McDouble, for $2. Within months, Wendy’s offered a four for $4 deal. Burger King offered five for $4. Pizza Hut had a $5 “flavor menu.”

APP-DRIVEN DISCOUNTS
Now, instead of across-the-board menu slashes and broad discounts, industry analysts say chains are being more selective, aiming them at specific demographics or limiting them to specific meal times or channels, such as its app or only through delivery.

McDonald's executives told investors in February that it would rely on its existing "value menu" to appeal to low-income consumers who might be tempted to eat packaged food at home instead. CFO Ian Borden said affordability is core to the brand, and the company would continue "evolving" its value offerings.

“The battleground is certainly with that low-income consumer,” McDonald’s CEO Chris Kempczinski told investors, referring to people making less than $45,000.

Wendy’s recently introduced a limited-time $1 burger — available only through its app. Its CFO Gunther Plosch told investors in February that among lower-income customers, their traffic is down but their share with the general market is unchanged.

For major fast-food companies, loyalty apps are the go-to strategy among major brands to increase retention and the average amount of money spent. The upside for chains, David Henkes, senior principal with Technomic said, is that they capture more transaction data and demographic data for the consumer, “which is a trade-off many are happy to do.”

For example, McDonald's frequently offers in-app discounts, such as 20% off an order or free delivery with a large enough order.

Domino’s (DPZ.N), opens new tab halved the minimum purchase price to get points in its loyalty program, to $5 from $10, its CEO told investors at a conference in January. It also reduced the number of purchases needed to get a free pizza to as few as two from six. “And so essentially, for this lower-income consumer, we’ve made the brand more accessible,” CEO Russell Weiner said.

To be sure, not every chain is seeing weakness among low-income customers. At Taco Bell, which sells a single taco for $1.40 at many of its stores in San Antonio, locations in low-income markets did better than other locations, Yum! CEO David Gibbs told investors in February.

McDonald's still holds its appeal for Andreas Garay, a retail worker eating at a McDonald's in westside San Antonio. He said he plans to keep his coffee-and-Big-Mac habit-- even if prices continue going up.

Maybe they will eat better food and be less fat but I doubt it.

Sounds as if those people just need more help in these difficult times. I wonder if we could try an EBT-type card for them to swipe at fast food places only? Maybe give them an extra 2-300 bucks a week on that card to help them get through this? Seems the right thing to do.

I laugh at the thought 50k is low income.

Also, no two burger and a drink combo should cost $30.

So any fuck nugget McD manager, the fastest way to cut prices is to get your drinks down to under a dollar. No way that syrup costs you $3 a cup.

I don't dine anywhere unless the table has a table cloth.

low income my ass

I'm not paying for it either

Ramen noodles are still cheap.

Hopefully fast food joints start going under, and it forces people to make better food choices.

If the billionaires that pay zero taxes would just pay their "Fair Share"*, we wouldn't have this problem.





* Fair Share of taxes to be paid is determined by leftists by how much an individual has, and then pretty much all of it. In addition, rich Democrats are excluded from "Fair Share".

They really push the apps because of the telemetry and tracking data they gather about you. You might only use the app once a week for a fast food order, but that thing is running in the background 24/7 gathering data points on you.  Selling that data is an additional way to make money off people.

No thanks.

ITT I learned that I'm just barely not low income.

12 years ago I made $45k and was living very comfortably.

Fat fuck problems.

After the last 5 years or so, $50k is definitely low income in a lot of places now.

Is my sarcasm meter broken or was this post actually serious?

I was in a drive-thru in Oklahoma City yesterday. Standard "number one combo" medium drink and medium fries, no upcharge. They took my order then my total came up on the screen $14 plus change

I chuckled when they read the total and told them "No Fucking Way", pulled out of line then drove down the street and got something to go from a real restaurant

The problem with McDonald's is million dollar a year owners and their hundred thousand dollar a year managers

I sorta felt sorry for the owner of the Chic-fil-a store at 71st & Mingo when he got his Shelby Mustang stolen ....but not really. BTW, they recovered what was left of the car after it had been stripped for parts

I make well above 50,000 a year and refuse to pay those prices.

It wasn't 4 years ago.

Attached File

Attached File

Attached File

Fast food joints have no appeal to us. Last night we had planned on a great meal of Scamp Grouper , Baked oysters and a salad but the proteins hadn't quite thawed enough so we'll have it tonight. Last night instead we opted to go to our local Italian restaurant and ordered a Stromboli and a 14" spinach Pizza to go. We had enough left over for lunch today. Total cost $23. That's FOUR MEALS FOR $23!!!. Had we gone to Mickey Dees it would have been twice that for four meals. The meal was excellent, it's a small business and the owners cook/prepare the food. It's all about choices IMHO.

Take away EBT cards and corporate fast food joints will collapse as they should.

We have stopped all together going to “fast food” establishments. It isn’t because we can’t afford it; it is because we don’t see it as a good value. For example the wife and I ate choice ribeye last night. We each had 7 oz cut of a ribeye for $5 each. We baked a potato in the oven and grilled the ribeye on the bbq. It sure beats $15 each for a burger meal from a fast food joint.

Can SNAP be used at Mc Donald’s?

The gap between the cost of fast food and a nice sit down restaurant has really narrowed.

SNAP only valid on non-prepared food, and also it has to be cold. No hot foods allowed.  For example, you can use SNAP to buy a frozen pizza but you can't use it to buy a hot pizza.

Oddly enough you can use SNAP to buy live lobsters.

Only way to make it happen is less beef and more HF corn syrup.

Crazy to think that millions of Americans are splitting burgers and using apps to grab 1$ burgers....and still dreaming of the day they can vote for Democrats again .

Do we have a "no shit, sherlock" emoji?
Fast food joints want to charge you $3 for a drink?  The majority of their cost is in the cup.  They have $0.15 invested in it, and want to mark it up 2000%.

A combo meal shouldn't be $12, $15, or $20 like it is getting in some areas.

And lets not even get into them hiring the stupidest, slowest humans on the planet.  Even when you order ahead on the app and tell them to start making the food, it still takes them 30 minutes to make a whopper and fries and hand it to you through the window.  You already took away all the punching in the order on the cash register and counting money and these dumb fucks still cant figure it out.

For sure, eating at home is most economical and healthy, and that's what we do most of the time. But even if you need/want to eat out, fast food is getting too expensive.

I get the boy from school once a week and take him to game night. Door to door, we only have about 45 minutes. It's not far, but that's a tight schedule. We often go through a drive through and get some burgers & fries. It's at least $20

There are still local restaurants where you can get a decent meal cooked to order, and eat it with a fork, for that kind of money. Heck, there's a good steak house a couple of towns over that has a prime rib lunch special for $18. Paying over $10 for a fast food burger combo just seems crazy.

Poor people trying to save a buck by not buying over priced shit food?
I don't see this as a problem.

No it won’t.

I’m sure it has nothing to do with the quality having declined by 87% in the last 10 years.

Even if they outlet has decent ingredients the barely trained poorly managed employees fuck it up eight ways from Tuesday.

I may be caffeine addicted but I'm opting out of the $3 medium sodas.  Ya'll crossed the line.  I'll have a cup of water, maybe later I'll drink a 40 cent grocery store soda at home.  When eating fast food I still buy the same sandwiches, maybe I skip or downsize the fries more often.

I can't believe people eat food from nearly any type of fast food outlet these days.

Working at home and getting a half hour lunch sometime I'll run to McDonalds just to get out the house. If not for the discounts on the apps and a frozen choke wouldn't bother. And my dogs get a treat splitting a plain burger.

Attached File
Attached File

The fast food industry has been in decline for the last fifteen or twenty years.

Then about twelve years ago they decided they would go woke.

Now all this shit here.
It's not surprising.

Huh.

A local steak house has a lunch menu item of a 6oz sirloin, side, rolls, and salad bar for $15 which is pretty much what fast food joint will charge for a larger burger and fries.  The only difference is leaving a tip for the waitress.

This.

We typically only hit the fast food joints while on the road, and basically for the last year, we are in awe of the lack of value. I don’t see how they are going to survive.

McDonald's food is too low in quality for the price.

Uh huh, sure you did. Because the prices aren't posted anywhere before you order.

I'm seeing more and more places saying, "but it's free, a soda comes with it..." (you're paying for the damn drink, like it or not)

I won't compromise my privacy to use a discount app so a double burger with bacon, fries, and a coke are just under $20 now at Wendy's.

That was a day's take home pay when I first started working, but back then the minimum wage was $2.65 and that meal above was a $1.

Imagine that, companies raise prices and people buy less.  Who'd have thunk it?

It's really hitting small breweries / wineries as well. Seeing a big slump in business.

If they're not careful they might (MIGHT) become healthy enough to come off disability and have to work for a living!

I’m not quite here yet but it’s getting close.

The hard core will eat Big Macs till it kills them.

Fuck these prices.

I have cut back my eating out by 75%.  All restaurants.