Despite value deals, fast-food prices are on the rise

Illustration for article titled Despite value deals, fast-food prices are on the riseem/em
Photo: Sergey Nazarov (iStock)

Though menus are full of dollar deals, $4 combos, $5 meals, and even one-cent burger promotions, fast food overall has become more expensive in the past decade—and not just to keep up with inflation. According to analysis of data provided to The Takeout by food-industry market research firm Datassential, the median price of fast-food burgers and chicken sandwiches have increased 54 and 27 percent, respectively, since 2008.

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The median burger price at a fast-food restaurant (referred to as a quick-service restaurant, or QSR, in industry-speak) rose from $4.50 in 2008 to $6.95 today. That’s not only an objective jump in price, but it changes the psychological experience for customers paying in cash: 2012 was the last year that a person could buy the average fast-food burger with a five-dollar bill. Today, the median fast-food chicken sandwich goes for $6.99, up 4 percent since just last year.

Why?

The Chipotles of the world possibly play a part.

“You used to go to fast food places with $5 and expect to get change,” restaurant consultant Aaron Allen told TODAY Food. “But when fast casual came around, like Chipotle and Five Guys, you expected to hand over $10. This changed how much fast food [restaurants] could charge for a burger.”

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The rise of chains promising better ingredients and more elaborate toppings slowly conditioned customers to expect these things from fast food, too. (The median burger price at fast-casual restaurant this year is $7.49.) McDonald’s recently announced it would remove artificial colors and preservatives from many of its burgers, and it’s also testing fresh-not-frozen chicken at 160 locations. Dunkin’ has also pledged to remove artificial coloring from its doughnuts.

Those upgrades come with price tags, as do increased wages for restaurant employees and companies’ sustainability efforts. If customers expect fast-food restaurants to step up their game, it looks like they’ll be the ones footing the bill.

Kate Bernot is a freelance writer and a certified beer judge. She was previously managing editor at The Takeout.

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DISCUSSION

noodlesintheface
noodlesintheface

Things like this are why I wish I had more access to the raw data.

When it says median burger price in the QSR space jumped from $4.50 in 2008 to $6.95 today, what burgers are included in that? The flagship at each restaurant, e.g. Quarter Pounder with Cheese, Whopper, Wendy’s Classic Single, comparing the median increase in that? Or does it include the more specialty burgers that are added at the top-end of the range at each place? The McDonalds Signature Crafted (tm) series didn’t exist in 08 and now if you want a Bacon Smokehouse Buttermilk Crispy Chicken Mushroom And Swiss Deluxe, you’ll pay $7.99 for that, but the dollar menu didn’t get an corresponding increase in items so top-heavy outliers will draw the median upwards.

Also, there’s a complication with any cost of living / inflation / cost adjustment calculator, and that’s substitution bias. Someone who was used to going to a QSR with a $5 and getting food and change back may have seen their meal price rise from $3.99 to $4.99 to $5.99 to $6.99, but have substituted downwards to still get similar utility for their food dollar. Think of someone who used to buy boneless skinless organic chicken breasts, then as their income stayed flat but prices rose, they switched to buying chicken thighs, then to quartered chicken pieces; the dollars they spend on chicken remain flat so a price index may not be sensitive to that, and not capture the shift in consumption.

So come on, data analysis company, give me year over year sales growth, sales volume of certain food products, margin on each (e.g. that large Coke cost them $0.03, $0.02 of which was the cup), and let’s really dive into how consumer behavior is changing because of Chipotle.

tldr, I really want an e. coli burrito right now.