Are Consumers ‘Done With Fast Food’ as Prices Climb?
Denis Montenaro, a regular McDonald’s diner, recently came to a decision.
“I’m done with fast food,” the 75-year-old California resident told The Wall Street Journal (WSJ) in a report published Sunday (May 5).
The reason? A visit to the Golden Arches that ended with Montenaro paying nearly $10 for a bagel sandwich and a cup of coffee.
As the WSJ noted, he might not be alone. The report — citing data from market-research firm Revenue Management Solutions — said that fast-food traffic in the U.S. fell 3.5% during the first three months of the year compared to the same period in 2023.
While the pace of food inflation in supermarkets and restaurants has slowed significantly over the past year, prices are still much higher than they used to be. Fast-food prices in March were 33% higher than 2019 levels, the WSJ report said, pointing to Labor Department figures, while grocery prices rose 26%.
The news comes as McDonald’s and other fast-food chains are facing a pullback by diners, especially lower-income customers.
“The macro headwinds have been more significant than I think we even anticipated coming into the year,” McDonald’s Chief Financial Officer Ian Borden said on a recent earnings call.
And Starbucks last week reported a 7% decline in U.S. traffic for its first quarter, the sharpest drop in at least 14 years, as it faces slower-than-expected growth in China (its largest market beyond the U.S.), severe weather, and continued consumer caution.
“The remainder of our challenges were attributable to fewer visits from our more occasional customers,” Starbucks CEO Laxman Narasimhan said.
Yum Brands, owner of several fast-food chains, reported its own decline in sales, with Pizza Hut and KFC down a respective 7% and 2%.
“This pattern underscores broader trends affecting the fast-food industry, including fluctuating consumer spending habits,” PYMNTS wrote May 1. “The decrease in sales at Pizza Hut and KFC could be linked to a general reduction in discretionary spending, a sentiment echoed across the sector, including by peers like McDonald’s.”
Casual dining company Brinker International, owner of Chili’s and Maggiano’s, is attempting to capitalize on consumer frustration with fast-food prices. CEO Kevin Hochman said last week that its advertising efforts are focused on Chili’s value.
“We’re using fast food as a foil, mainly because everybody is familiar with the fast-food experience and the pricing,” Hochman said. “And so, it’s an easy foil to use for them to give you relative value. Casual dining is actually a different occasion than fast food.”
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