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An $18 Big Mac Sparked A Revolt Against High Prices. Companies Are Finally Listening
Pop quiz: How much does a Big Mac, fries, and a fountain drink, often known as a Big Mac combination meal, cost?
Many people assume it’s $18 after a post on X of McDonald’s menu prices at a Connecticut rest station went viral and made national headlines. (Narrator’s voice: It is not.)
A top McDonald’s official wants to clarify the situation nearly a year after the tweet. In a recent letter, Joe Erlinger, president of McDonald’s USA, stated that $18 for a Big Mac combo was an “exception” rather than the norm across all 13,700 outlets in the country.
Big Mac | Quara image
An $18 Big Mac Sparked A Revolt Against High Prices. Companies Are Finally Listening
It doesn’t matter that almost no one pays anything close to $18 for a Big Mac combo. (According to a fact sheet distributed by McDonald’s along with the letter, the average cost is $9.29.) What counts is that the message struck a chord with many people who are fed up with how much fast food costs nowadays.
For years after COVID-19, fast-food restaurants boasted on earnings calls about how easily they could raise prices without customers noticing.
Yes, fast-food restaurants’ expenses increased as inflation surged, forcing them to spend more money recruiting employees. But they did not suffer as a result.
Profits climbed as prices rose. Of course, this was only true because consumers were willing to pay more as their incomes increased, and they had collected significant savings during the pandemic.
Big Mac | CNN Image
An $18 Big Mac Sparked A Revolt Against High Prices. Companies Are Finally Listening
Now, businesses such as McDonald’s, which did not reply to CNN’s request for comment, are playing defense. They’re justifying previous increases retroactively, telling them, “I understand your frustration,” while telling them, “We aren’t the villains your social media posts portray us to be.”
“The average price of a Big Mac in the US was $4.39 in 2019,” Erlinger stated in his recent letter. “Despite a global pandemic and unprecedented increases in supply chain costs, wages, and other inflationary pressures in the years since the average cost is currently $5.29. “That’s a 21% increase (not 100%),” he explained.
If that’s the case, a 21% price increase from 2019 is lower than the Consumer Price Index’s 23% overall growth in prices across goods and services over the same period.
Furthermore, prices for various goods and services have risen dramatically. According to CPI data, the average US consumer’s vehicle insurance rates have increased by more than 40% between 2019 and the present.
People are unhappy, but I have not seen a viral post about vehicle insurance prices. This may be because vehicle insurance businesses haven’t spent their entire lives marketing themselves as a low-cost good for the general public.
I’m inclined to bet Erlinger was made aware of the viral $18 Big Mac combo post shortly after it became popular. So, why did it take him a year to react to it.
An $18 Big Mac Sparked A Revolt Against High Prices. Companies Are Finally Listening
McDonald’s CEO Christopher Kempczinski told analysts on the company’s April results call that restaurant profit margins have returned to 2019 levels. Consumers are reaching their breaking point due to the price rises they have endured over the last four years. And with paycheck increases flattening out and savings disappearing, it’s biting even more.
“We’re going to be cautious and thoughtful about any further price increases that we’re looking at for the rest of 2024 on that basis,” said Ian Borden, McDonald’s CFO, during the call.
That’s why McDonald’s is introducing a $5 menu.
However, they are not the only ones making a shift. Target, Walgreens, Amazon, Walmart, Wendy’s, and Starbucks are all lowering prices on thousands of items to reclaim customers who have fled due to price hikes.
Customers are fed up. And it is finally affecting companies’ bottom lines.
SOURCE – (CNN)
