McDonald's Is Losing A Key Customer Base

As menu prices increase, lower income Americans are visiting McDonald's less than they were before.

Historically, McDonald's has maintained such a loyal customer base that price hikes have done little to deter people from ordering their Big Mac Meal. However, the brand's leadership noted in the most recent earnings call that lower-income McDonald's customers might finally have reached their limit.

Referring specifically to consumers earning $45,000 or less per year, McDonald's CEO Chris Kempczinski noted that consumers are feeling pressured. "From an industry standpoint, we actually saw that cohort decrease in the most recent quarter, as eating at home has become much more affordable," Kempczinkski said on the call.

A TikTok video from December 2022 began recirculating at the end of 2023 and sparked some outrage online at just how expensive fast food meals have become. The video shows a customer's McDonald's meal, which included fries and a drink, and a receipt totaling $16.10, with voiceover saying, "It's just crazy." McDonald's prices did go up by 10% each year since 2022, but Restaurant Business notes the company does not control menu pricing, franchisees do.

Recent federal data also shows that the price of food at home went up 1.3% in December 2023 compared to the previous year. At the same time, food away from home was 5.2% higher than the previous year.

McDonald's isn't the only fast food chain whose menu price increases have turned off loyal customers. Chipotle has gone through multiple price hikes in recent years to "offset inflation," which has not sat well with many customers.

Recent data shows that some consumers are ready to ditch fast food in favor of convenience store meals or just cooking at home. Recent polling data from Technomic, a food service intelligence company, found that 54% of convenience store consumers said they're reducing visits to restaurants because of higher menu prices, but only 30% said they were buying less convenience store food for the same reason.

McDonald's didn't give any clear indication that it will be bringing prices down to help re-attract its lower income customers, but the brand does plan to emphasize value deals even more and noted price increases would ease in 2024.

"I think what you're going to see as we head into 2024 is probably more attention to what I would describe as affordability," Kempczinski said.

At its core, fast food is meant to be simple and affordable. That is the aim of the industry, and that's why so many brands look to deliver "value" to customers. Unfortunately, with inflation leading many brands to raise their prices, even the best value deals might not be enough to keep those on a tight budget from looking for more affordable meal options.

Recommended