McDonald's will prioritize making its food more affordable moving forward, following reports from company leaders that spending by lower-income customers has decreased.
During a recent earnings call, McDonald's CEO Chris Kempczinski noted that customers earning $45,000 or less have significantly reduced their spending, as "eating at home has become more affordable."
Kempczinski emphasized that lower-income Americans are especially affected by high inflation.
"That consumer is under pressure," he stated regarding customers earning less than $45,000 annually. "From an industry perspective, we observed a decline in that demographic in the most recent quarter, likely due to the increased affordability of eating at home."
According to the U.S. Bureau of Labor Statistics, the prices of food made at home increased by just 1.3% in 2023, whereas the price of food away from home rose by 5.2%.
Kempczinski indicated that in the upcoming months, the company intends to prioritize "affordability" and "absolute price point" rather than relying on temporary deals.
"The battleground is certainly with that low-income consumer. And I think what you’re going to see as you head into 2024 is probably more attention to what I would describe as affordability," he stated.
In recent months, several viral posts have highlighted the high cost of certain McDonald's items, particularly at a rest stop in Darien, Connecticut, where a Big Mac meal costs $18 in person.
Interestingly, the same meal from that specific restaurant on Grubhub is even more expensive, listed at $21.59 at press time.
McDonald's states that most of its locations are owned by franchisees, who typically have the autonomy to set their own prices.
Additionally, the company is tapping into nostalgia to attract new customers. McDonald's launched the first of several spinoff restaurants called CosMc's in Bolingbrook, Illinois, in December. These small-format restaurants have a space-themed design, focusing on beverages and breakfast. The concept is inspired by McDonald’s beloved extraterrestrial mascot from the ’80s and ’90s.
"Consumers can rediscover their way back to some of these QSR (quick service) restaurants by reconnecting with what initially drew them in," stated Laura Murphy of Bolt PR to NBC News. "McDonald’s exemplified this strategy last year... they began reintroducing nostalgia."
Meanwhile, Taco Bell is broadening its value menu to include 10 items priced under $3. The company emphasized to NBC News that it "remains committed to providing our fans with delicious food at affordable prices."
Yum Brands, which encompasses top brands like KFC, Taco Bell, and Pizza Hut, reported weaker-than-expected growth, as noted by NBC News.
In contrast, Chipotle experienced an increase in sales and foot traffic, despite implementing a 3% menu price hike in October. CNBC reported a 7.4% surge in foot traffic for the company in Q4.