A recent report from The Street reveals that six American fast food companies have increased their prices by 77.4 percent in a span of ...
A recent report from The Street reveals that six American fast food companies have increased their prices by 77.4 percent in a span of 51 months, far outpacing the inflation rate over the same period.
According to the Bureau of Labor Statistics inflation calculator, the overall inflation rate between December 2019 and March 2024 is about 21.5 percent.
Over the past five years, analysis shows that prices for the most popular items at major fast food chains have surged. For instance, at Burger King, the Whopper increased from $4.19 to $7.79, an 85.9 percent rise, while the Bacon Double Cheeseburger skyrocketed 117.9 percent, from $2.29 to $4.99. The average price increase across five Burger King items was 85.7 percent.
McDonald's saw the most dramatic hikes, with its cheeseburger jumping from $1 to $3.15, a staggering 215 percent increase. In-N-Out's Double Double burger went from $3.45 to $5.65, a 63.8 percent rise.
Taco Bell's prices also surged, with the Beefy 5-layer Burrito increasing from $1.69 to $3.69 – a 118.3 percent hike. The average increase at Taco Bell was 57.4 percent. Jack in the Box showed the least inflationary impact, with an average increase of 45 percent. Notably, their Two Tacos remained at $0.99, showing no price increase. Chick-fil-A's average increase was 80.1 percent, with its Deluxe Chicken Sandwich rising from $3.65 to $6.55, a 79.5 percent increase.
Overall, the prices at the six analyzed restaurants went up by an average of 77.4 percent between December 2019 and 2024.
This phenomenon, now known as "fastflation," refers to outsized inflation at fast food establishments – businesses that historically aimed to maintain low prices to better serve working folks on limited dining budgets. Consumers have noticed these supersized prices at the drive-thru, and they aren’t happy. The drive-thru is no longer the greasy bastion of value it once was.
Fast food companies meet halfway with customers to maintain profitability
In line with this, fast food sales are experiencing a downturn, with consumers seeking alternative options for convenient meals.
As a response, Taco Bell highlights its $3-and-under Cravings menu, which now features in about a third of its transactions. This helped Taco Bell sustain its profits and increase sales of its Crunchwraps, even with higher menu prices.
"You're seeing some low-income consumers fall off in the industry," said David Gibbs, CEO of Yum! Brands, Taco Bell's parent company. "We're not seeing that at Taco Bell."
Similarly, McDonald's has introduced a $5 value menu, while Wendy's has launched a $3 breakfast deal. Both offers are available for a limited time. Additionally, approximately 90 percent of McDonald's locations in the U.S. continue to offer a $4 meal deal. Fast food companies also leverage their mobile apps to attract customers with loyalty programs that include low-priced or free items upon sign-up.
"We know how much it means to our customers when McDonald's offers meaningful value and communicates it through national advertising," McDonald's USA stated. "That's been true since our very beginning and never more important than it is today."
This returned McDonald's restaurant profit margins to pre-pandemic levels. But then, Kempczinski also clarified that even though the costs of ingredients like burgers, buns and wrappers have decreased, higher wages continue to drive up prices.
No comments