Goodbye to cheap meal options: Why fast food is getting more expensive
Rising food, rent, and labor costs are squeezing fast-food chains, pushing menu prices higher and forcing customers to rethink dining choices.
You’re not imagining it. Fast food really has gotten more expensive. But it’s not all the fault of the big corporates and their franchisees who run many of the restaurants - there are good reasons why prices have shifted upwards.
The biggest factor: costs. Food prices overall have jumped 23.6% since 2020, according to the U.S. Department of Agriculture, and fast-food chains have been hit especially hard. COVID-19 upended global supply chains, the war in Ukraine pushed up grain and cooking oil costs, and higher fuel prices made transporting goods more expensive.
On top of that, labor has become more costly. Many states and cities now mandate a $15 per hour minimum wage, and unlike casual restaurants that rely heavily on tipped employees, fast-food outlets are fully exposed to those higher wages. Rents for new units have also climbed, squeezing franchisees.
Prices rise faster than inflation
Joe Erlinger, president of McDonald’s USA, said in an open letter in May 2024 that overall costs for food, labor, and utilities have risen about 40% in the last five years. Menu prices have moved up by a comparable amount.
He disputed viral claims that prices had doubled, pointing out that a Big Mac averaged $4.39 in 2019 and $5.29 in 2024 — a 21% increase. Still, that’s far higher than the typical 2% to 2.5% annual rise in prices consumers were used to before the pandemic.
A problem for the fast-food industry
For decades, fast food was marketed as the affordable family meal or the quick, cheap fix when you were short on time. Now it’s often not much cheaper than a sit-down meal. Casual dining chains have seen costs rise closer to 20%, giving them a relative edge in value.
That perception matters. Customers who once turned to fast food for a low-cost option are starting to think twice. Some are dining out less often, while others are opting for grocery store prepared meals or cooking at home.
How fast-food chains are responding
To win back price-sensitive customers, chains are leaning heavily on value menus, bundle deals, and limited-time offers. McDonald’s, for example, relaunched a $5 Meal Deal earlier this year. Others are experimenting with regional promotions to lure in traffic.
Menu innovation is another tactic. Chains are rolling out premium burgers, plant-based items, and seasonal specials — higher-margin items that both grab attention and, they feel, justify steeper prices.
Still, the squeeze is real. As Erlinger put it in his letter, rising costs are “not something that can be absorbed entirely by the business.” And with inflation still hitting consumers across the board, even the once-reliable lure of cheap fast food may never fully return.
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