Americans are choking on surging fast-food prices. "I can't justify the expense," one customer says
Americans are choking on surging fast-food prices. "I can't justify the expense," one customer says
The price of a McDonald's Quarter Pounder with Cheese meal has more than doubled since 2014, data show.
Kevin Roberts remembers when he could get a bacon cheeseburger, fries and a drink from Five Guys for $10. But that was years ago. When the Virginia high school teacher recently visited the fast-food chain, the food alone without a beverage cost double that amount.
Roberts, 38, now only gets fast food "as a rare treat," he told CBS MoneyWatch. "Nothing has made me cook at home more than fast-food prices."
Roberts is hardly alone. Many consumers are expressing frustration at the surge in fast-food prices, which are starting to scare off budget-conscious customers.
A January poll by consulting firm Revenue Management Solutions found that about 25% of people who make under $50,000 were cutting back on fast food, pointing to cost as a concern.
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It's actually serious enough that fast food companies are planning to reduce prices. It's unheard of.
I suspect this reckoning is coming for other industries too.
In some companies when the post-pandemic shortages hit for real and hard, they rose prices until they actually could source enough stuff to actually serve customers. Then a very vocal group of "told you so" folks saying the fact they made same money with higher prices and fewer customers and thus less expense was what they should have been doing all along. So even as shortages eased, suddenly a lot of companies switched to "low volume, high margin" strategies, e.g. screw most customers, we can gouge a few and make the same money while taking care of fewer people.
Now you can see erosion in the "high margin" businesses, because that temporary success and the extent it continued was built on:
- Having no choice during the shortages
- Habits or some sort of lock in causing people to keep spending even after alternatives start opening up, but those wear out, and I think a lot of businesses are starting to feel this.
I really hope so.