Millions of American families are hitting the road for the start of summer vacation, and ordering food on the go is usually a given. It couldn't come at a better time. Fast-food joints are in the midst of a budget food war, offering promotions to lure customers back to their restaurants despite concerns about inflation and a minimum wage increase in California and other states.
Starting June 25, McDonald's is offering a month-long deal with a combo meal – either a McChicken, a McDouble or four-piece chicken nuggets, small fries and a small drink – for $5.
Following McDonald's announcement last month, other fast-food restaurants followed suit. Wendy's announced its limited-time $3 breakfast combo meal and Burger King loudly announced that it plans to bring back its $5 “Your Way” menu.
In addition, fast food mobile apps continue to offer deep discounts.
App facilitation
Earlier this week, a Big Mac with medium fries and medium drink at McDonald's in Santa Ana cost $11.79 before tax. The same meal ordered through a mobile app for pickup at the same location cost $6.50 before tax, a savings of $5.29.
However, prices and offers tend to vary depending on the user.
Diners are complaining about McDonald's mobile app on Reddit. Some say the decline in deals is related to usage. Others say their friends or partners got a better deal than they did through the app. Some mentioned that they could find better deals if they just stopped by their local McDonald's and ordered from there.
The plethora of special offers came about after guests criticized fast-food companies on social media earlier this year for rising prices.
In response, Joe Erlinger, president of McDonald's USA, said in an open letter last month that the average price of McDonald's menu items has increased by an estimated 40% since 2019.
The McDonald's restaurant logo and golden arch shine in Chicago. McDonald's plans to introduce a $5 meal deal in the U.S. in June 2024 to counter declining sales and customer frustration over high prices.
(Jeff Roberson / Associated Press)
“Recently, we've seen viral social media posts and poorly sourced reports that McDonald's has raised prices well above inflation rates. This is inaccurate,” Erlinger wrote.
“The average price of a Big Mac in the U.S. was $4.39 in 2019,” he said. “Despite a global pandemic and historic increases in supply chain costs, wages and other inflationary pressures in the years that followed, the average cost is now $5.29.” That's a 21% increase (not 100%), as unsubstantiated claims on social media claim.
Fast-food restaurants said the increases were a response to rising inflation and labor costs – partly due to increases in the minimum wage not only in California but across the country.
It's true that fast-food restaurants like McDonald's have had to compete with increased costs, but they're not doing any harm, said Shubhranshu Singh, an associate professor at Johns Hopkins University who specializes in quick-service restaurant marketing.
“They don't have any problems,” Singh said. “Inflation is rising. Wage rates are rising. But McDonald's profits are also rising.”
According to the latest statistics provided by the company, McDonald's global comparable sales rose nearly 2% in the first quarter of the year. The fast-food giant described this profit increase as “benefiting from average check growth driven by strategic menu price increases.”
Price-weary diners have taken note of the price increases and are fed up, choosing to eat less fast food and protesting on social media that their low-priced meals are no longer wallet-friendly, Singh said.
Several diners took aim at McDonald's, complaining on TikTok that the company charges more for food that is supposedly affordable.
“That's $3 worth of food,” said one customer, holding up a hash brown. “Something seems wrong here.”
“McDonald's has become too cocky,” said another customer. “You're not supposed to be expensive.”
One guest called it “absurd” that she paid $4.59 for a medium order of French fries.
And then there was the uproar over a McDonald's in Connecticut charging $18 for a Big Mac combo meal. The photo sparked a national debate about rising fast-food prices.
Make choices
Most McDonald's in the United States are independent franchises, so prices vary depending on where you visit.
Increased fast-food prices ultimately resulted in slower-than-expected sales at various quick-service restaurants such as McDonald's, Starbucks and Pizza Hut.
“Consumers are always making choices,” said Bank of America restaurant analyst Sara Senatore. “If the value proposition diminishes, consumers will make different choices.”
Until recently, consumers were willing to pay more for fast-food meals. When fast-food prices started rising in 2022, consumers simply went along with it because prices everywhere had skyrocketed due to inflation, Senatore said.
But now inflation has fallen, food prices have fallen and price-conscious consumers may no longer see fast food as a clearly affordable choice, she said.
Enter the value meals.
Fast-food workers demonstrate in front of Los Angeles City Hall in 2022 for a proposed minimum wage increase. The approved increase took effect on April 1 and was seen as a victory for organized labor.
(Brian van der Brug / Los Angeles Times)
Budget meals are nothing new. In the 1980s, McDonald's, Wendy's and Burger King ran a series of advertising campaigns known as the “Burger Wars” to compete for customers in the then-thriving fast-food market.
“The hope is that the consumer will go there and maybe buy something in addition to the inexpensive meal and then want to return even if there is no offer,” Singh said.
But the promotions, analysts warned, cannot last forever.
“It's not sustainable,” Singh said. “I don't expect any of these deals to last.”
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