Dive Brief:
- McDonald’s USA President Joe Erlinger said reports and social media posts about McDonald’s prices rising higher than inflation are “poorly sourced” and “inaccurate” in an open letter posted on its website Wednesday.
- “I can tell you that it frustrates and worries me, and many of our franchisees, when I hear about an $18 Big Mac meal being sold - even if it was at one location in the U.S. out of more than 13,700,” Erlinger said. “More worrying, though, is when people believe that this is the rule and not the exception.”
- The average price of a Big Mac in 2019 was $4.39 that year, compared to $5.29 today, which is an increase of 21% and not 100% per the reports, he said.
Dive Insight:
Franchisees set the prices for their menus at their restaurants, which typically account for the price of doing business, Erlinger said.
“Prices for many of our menu items have risen less than the rate of inflation – and remain well within the range of other quick service restaurants,” Erlinger said. “It’s also why more than 90% of U.S. franchisees are offering meal bundles for $4 or less.”
For 2023, pricing was up in the mid- to high single-digits depending on the location of the restaurant, and increases were largely made to combat inflation, CEO Chris Kempczinski said during the company’s Q4 2023 earnings call. During the fourth quarter, pricing went down due to decrease in inflation, he said.
Pricing taken since 2019 was to offset high labor inflation as well as high commodity, food and paper costs, Kempszinski said during the company’s Q1 2024 earnings call. Restaurant margins are back to where they were in 2019 in the U.S., he added. Any pricing that is seen now is just a carryover from last year and what has occurred in California following the $20 minimum wage that went into effect in April, he said.
The chain is also planning to add a national value program later this year compared to more local-oriented value to provide clearer messaging around the chain’s affordability. One way it will likely emphasize value is through a reported limited-time $5 meal bundle that will last about a month over the summer. Other chains like Burger King, KFC, Jack in the Box and Wendy’s are also offering value meals of $5 or less.
“McDonald's has a long history of being the go-to destination for value and it's imperative that we continue to keep affordability at the forefront for our customers,” Kempczinski said on the Q1 call. “We literally wrote the playbook on value, and we are committed to upholding our leadership within the industry.”
Regardless of Erlinger attempting to set the record straight, Americans’ perception of fast food pricing may have more of an impact on spending patterns. A majority of Americans believe fast food is too expensive, and 65% said they were shocked by fast food prices in the past six months, per a LendingTree study.
