Runaway prices at U.S. fast food joints and restaurants have made people skittish down the income ladder and executives at chains including McDonald’s and Wendy’s recently said they worry about losing business from those on the tightest budgets.
Roughly a quarter of low-income consumers, defined as those making less than $50,000 a year, said they were eating less fast food and about half said they were making fewer trips to fast-casual and full-service dining establishments, according to polling in February by Revenue Management Solutions, a consulting firm.
The rising price of food is contributing to budget-conscious diners cutting back.
Whether consumed at home or in a restaurant, food prices rose 20 percent from Jan. 2021 to Jan. 2024, the fastest jump on record. A recent census Household Pulse Survey showed half of people earning less than $35,000 a year had difficulty paying everyday expenses, and nearly 80 percent were moderately or “very” stressed by recent price increases.
Lauren Oxford, a musician who works part time at a bed-and-breakfast in Tennessee, said she used to stop by McDonald’s after running errands, treating herself to two double hamburgers, fries and a drink, for less than $5. As prices rose, she switched to smaller hamburgers and stopped getting the drink.
But after a year in which McDonald’s franchisees drove prices up about 10 percent, according to the company’s executives, she’s going to McDonald’s less in general. “Now I don’t know if I can justify that.”
In the Fed’s most recent Beige Book compendium of anecdotal reports gathered from business and community contacts around the country, 7 of 12 regional Fed districts reported low-income consumers were changing spending habits in search of bargains, seeking more help from community groups, or struggling to access credit.
About one-third of Black American households, and 21 percent of white American households, earned less than $35,000 in 2022, according to the latest available U.S. census data.
For fast-food companies that often promote an image of affordability, low-income consumers are a significant portion of the customer base and a bellwether for longer-term trends. But they are typically the first to cut back spending and the last to come back.
The abuse of fast food already causes more cirrhosis than alcohol
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