Recent financial reports suggest that McDonald’s has priced itself out as an affordable fast-food chain, according to The Washington Post.
Sales in the first quarter slumped 3.6%, the biggest decline McDonald’s has seen since 2020, when a pandemic shuttered its locations and other public spaces nationwide.
Industrywide traffic from consumers making $45,000 per year or less was down by double-digit percentages, chief executive Chris Kempczinski said on a conference call with analysts last week, and traffic from middle-income consumers was down nearly as much. Only traffic from those making $100,000 or more annually remained solid.
“People are just being more judicious about cutting back on visits,” Kempczinski said.
“We’re not immune to the volatility in the industry or the pressures that our consumers are facing.”
The average price of a McDonald’s menu item increased 40% from 2019 to 2024, including the Big Mac (21%), Egg McMuffin (23%) and 10-piece McNuggets meal (28%).
“A lot of their base is that low-income consumer, and when prices go up and you see rapid inflation and economic uncertainty, McDonald’s, in some ways, is one of the most vulnerable companies out there,” Joseph Nunes, a marketing professor at the University of Southern California’s Marshall School of Business, told the Post.
And R.J. Hottovy, head of analytical research at Placer.ai, said: “If things get more difficult in economic downturns, people tend to go to the brands they know and that have a reputation for being more affordable, but I think that’s shifted a bit in the last couple years,” and fast-food companies in particular “may have outpriced a lot of their consumers, and now those consumers are finding value elsewhere.”
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