McDonald’s Executive Addresses Claims of Price Increases
In response to claims that McDonald’s has significantly raised its prices, Joe Erlinger, the president of McDonald’s USA, released an open letter clarifying the situation. Erlinger stated that the average price of McDonald’s menu items has increased by approximately 40% since 2019, refuting claims made on social media that prices have risen by over 100%. He acknowledged the financial challenges faced by Americans and emphasized the company’s commitment to value and affordability.
Erlinger provided specific examples of price increases, noting that the average price of a Big Mac meal is now $9.29, a 27% increase from 2019. The cost of a 10-piece McNuggets meal has risen by 28%, while medium french fries have seen a 44% increase. These price adjustments are attributed to rising input costs, including crew salaries and the cost of goods.
To provide context, Erlinger highlighted that consumer prices have increased by 3.4% over the past year according to the Bureau of Labor Statistics. This trend of rising costs has affected the entire restaurant industry, including McDonald’s, which recently reported lower-than-expected same-store sales in its first-quarter earnings report.
To address concerns about affordability, McDonald’s will introduce a $5 value meal for approximately one month starting on June 25. The meal will include options like a McChicken or McDouble, four-piece chicken nuggets, fries, and a drink. Analysts at BTIG view this promotion as an attempt by McDonald’s to reestablish itself as a value leader in the industry, with the goal of changing the narrative around recent price increases.
However, some independent franchisees of McDonald’s are skeptical about the sustainability of this discounted offering. They argue that maintaining a 30% discount would require additional financial support from the company. The National Owners Association, an advocacy group representing McDonald’s franchisees, expressed concerns about the profitability of such a model in a letter to its members.
In conclusion, while McDonald’s has indeed raised its prices, the company disputes claims of exorbitant price hikes. It acknowledges the importance of affordability in light of the current economic climate and aims to provide value to its customers through promotions like the $5 value meal. The sustainability of this offering, however, remains a point of contention between the franchisees and the company.
