Three Democratic senators sent a letter to CEO Chris Kempczinski on Tuesday asking for more information on McDonald’s pricing, which they say continues “to increase, outpacing inflation and squeezing customers.”
“While McDonald’s is not the only fast food restaurant that has increased prices significantly in recent years, its dominant market position as the largest fast food chain in the United States has an outsize impact on American consumers,” Sens. Elizabeth Warren of Massachusetts, Bob Casey of Pennsylvania and Ron Wyden of Oregon said in the letter to Kempczinski.
During the summer, McDonald’s U.S. President Joe Erlinger issued a letter attempting to debunk media reports about 100% increases to menu prices over the past five years. The price of a Big Mac is up 21% today compared to 2019 when it was $4.39, he previously said, calling the reports “poorly sourced” and “inaccurate.”
“McDonald’s and our franchisees are committed to keeping prices affordable, from the everyday prices on our menu boards, to our popular $5 Meal Deal and other offers available locally or on the App,” the company said in a statement emailed to Restaurant Dive. “This letter demonstrates a lack of understanding of our franchise business model and contains contortions of facts and many inaccuracies.”
The letter cites a report from the Roosevelt Institute that said McDonald’s markup, or the difference between the prices consumers pay and cost to production, was 85% last year and the chain’s operating profits were 52%.
The senators’ letter also criticized McDonald’s stock buybacks, which were nearly $4 billion in 2022 and $3 billion in 2023, saying that the company prioritizes shareholders over its own workers and business.
“Corporate profits must not come at the expense of people’s ability to put food on the table,” the senators said. “As we seek to investigate and understand the increased consumer costs in the economy, we hope McDonald’s will help us to understand why its prices have risen so high.”
The chain has been centered on creating a national value platform since early this year. During the summer, it launched its $5 Meal Deal, extending it into fall, following improvements to traffic. The company told Restaurant Dive that its $5 Meal Deal with a McChicken would normally cost 15% more than it would have in 2020, which is “the opposite of price gauging.”
The senators asked Kempczinksi to provide further information by Nov. 4 on how it prices individual menu items, if the chain has offered other lower priced items beyond McDonald’s $5 Meal Deal, and if it provides guidelines for franchisees around pricing. The senators also asked how it determines stock buybacks and if the buybacks could be spent on cutting prices instead.
“We will respond to the letter, and in the meantime, continue to show up for our customers and our communities,” the company said.
The scrutiny into McDonald’s pricing practices comes as the fast food giant grapples with a deadly E. Coli outbreak that has sickened at least 49 people across 10 states. Experts have suggested that McDonald's may have to shift its marketing strategy away from value and focus on quality and food safety to win back customers.
