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Insight of the Day: Millions of Americans are fed up with fast-food prices

The Issue

  • Fast food prices have increased significantly faster than both grocery prices and the overall inflation rate since 2019 (33% vs. 26% for groceries, 19% CPI).

  • Customers are upset by these increases and some accuse fast food chains of "greedflation" (using inflation as a cover to hike prices excessively).

  • As prices rise, consumers are changing their spending habits, leading to a decline in fast food sales.

Key Evidence

  • Data shows a 3.5% drop in fast food traffic during the first quarter of 2024 compared to the previous year.

  • FinanceBuzz analysis found McDonald's prices have doubled since 2014, with other chains like Popeyes (86% increase) and Taco Bell (81% increase) also showing dramatic price hikes.

  • Comments from CEOs of McDonald's and Starbucks acknowledge that consumers are seeking value and becoming more price-sensitive.

Differing Approaches

  • While many chains have raised prices, Domino's successfully maintained a consistent value deal, likely contributing to more steady sales.

  • California's new $20/hour minimum wage for fast-food workers has further exacerbated price increases in the state.

Bottom Line

Americans are frustrated with the rising cost of fast food and are changing their spending habits as a result. This trend forces fast food companies to carefully consider their pricing strategies as consumers increasingly demand value.

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