McDonald’s suffers economic impact and considers new agreement to win back customers

McDonalds is considering persuading customers to return to its restaurants by offering a new food offering that won’t hurt its wallet.

Nationwide inflation is a struggle for many, including businesses. One of the world’s most popular fast food chains is taking a hit, generating less profit than last quarter. So how will they recover? The company has a plan.

McDonald’s suffers economic impact

Rising costs are hurting wallets in the United States, resulting in Americans reducing their consumption of fast food. This comes at a time when large chains such as McDonald’s have raised prices to offset increased labor and product expenses.

In March 2024, McDonald’s made a profit of $6.17 billion, down from December 2023’s profit of $6.41 billion. As of September 2023, they have raised $6.69 billion.

As profits continue to decline, the brand tries to find ways to attract customers back. Leaders in McDonald’s corporate offices are currently in talks with franchise owners to launch a new budget meal. This comes after McDonald’s executives reported a decrease in the number of customers dining at its restaurants.

McDonald’s may launch a new $5 meal

According to CBS NewsMcDonald’s is considering adding a $5 meal option to its U.S. menus to help attract consumers back to its locations.

If the franchise owners agree, the meal would include a choice of a McChicken, a McDouble or four-piece chicken nuggets as the main course, as well as fries and a drink.

On the April 30 earnings call, McDonald’s CEO Chris Kempczinski said, “Consumers continue to be even more discerning with every dollar they spend as they face high prices on their everyday spending, which is putting pressure on the industry.” .

“It is imperative that we continue to keep accessibility at the forefront for our customers,” he added.

McDonald’s raises prices

According to CBS, the finance website FinanceBuzz reports, “About 25% of people earning less than $50,000 are cutting back on their fast food consumption, pointing to cost as a concern, a January survey by consulting firm Revenue Management Solutions found.”

The report also concludes that McDonalds It is the business that increased menu prices the most between 2014 and 2024.

“When you look at McDonald’s, they’re not getting a majority of high-income customers — the middle- and lower-income classes are the majority of their business,” Kalinowski Equity Research analyst and president Mark Kalinowski told CBS MoneyWatch. “They need to be cautious with their spending, and that’s what we’re seeing now.”

The story continues

Americans Only Get Fast Food as a ‘Rare Treat’

Rising prices at fast-food chains like McDonald’s and Taco Bell appear to be hurting sales. Recent earnings reports show a decline in same-store sales over the past year.

“The idea was that you were getting good quality food for a low price and you could get it quickly,” Kevin Roberts said. CBS News. “Now I can’t justify the expense. If I’m paying $15 for a burger, fries and a drink and it’s McDonald’s quality, forget it — I’m going home.”

The 38-year-old told the outlet he remembers when he could get a bacon cheeseburger, fries and a drink at Five Guys for $10. Now, the bacon cheeseburger alone costs more than $10. In Columbus, Ohio , it costs $12.99 for a bacon cheeseburger. It costs $13.09 in New York City and $14.39 in Los Angeles.

Now, he only gets fast food “as a rare treat.”

“Nothing made me cook at home more than fast food prices,” he told the news outlet.

Fast food prices rise in the United States

McDonald’s isn’t the only fast food chain to raise prices, as FinanceBuzz reports that between 2014 and 2024, food prices from Popeye’s, Jimmy John’s, and Subway have risen by 86%, 62%, and 39%, respectively.

The finance site says the price of a two-piece chicken combo at Popeyes went from $6.49 to $11.39, and Jimmy John’s eight-inch tuna jumped from $5.75 to $ $9.10.

This is due to the increase in the minimum wage in the United States. According to CBS, “Across the U.S., 22 states raised their minimum wages in January, although the federal base wage remains stagnant at $7.25 per hour. In California, fast-food chains with 60 or more locations across the country are now required to pay their workers a minimum wage of $20 per hour following the passage of a new law last fall.”