William Simpson
Kevin Roberts remembers when he could get a bacon cheeseburger, fries and a drink at Five Guys for $10. But that was years ago. When the Virginia high school teacher recently visited the fast-food chain, the food alone without drinks cost twice that amount.
Roberts, 38, now only eats fast food “as a rare treat,” he told CBS MoneyWatch. “Nothing made me cook at home more than fast food prices.”
Roberts is hardly alone. Many consumers are expressing frustration with rising fast-food prices, which are starting to scare off budget-conscious diners.
One January survey Consulting firm Revenue Management Solutions found that about 25% of people earning less than $50,000 were cutting back on fast food, pointing to costs as a concern.
For some of the country’s best-known restaurant chains, losing low-income customers means weaker sales and potentially a reduction in profits, said restaurant analyst Mark Kalinowski, president of Kalinowski Equity Research.
“When you look at McDonald’s, they’re not getting a majority of high-income customers — the middle- and lower-income classes are the majority of their business,” he said. “They need to be cautious with their spending, and that’s what we’re seeing now.”
“Forget it – I’m going home”
As fast-food prices have risen, recent earnings reports from industry leaders such as McDonald’s and Taco Bell parent Yum Brands show that same-store sales have fallen over the past year.
“The idea was that you were getting good quality food for a low price and you could get it quickly,” Roberts said. “Now I can’t justify the expense. If I’m paying $15 for a burger, fries and a drink and it’s McDonalds quality, forget it — I’m going home.”
Casual restaurants are also feeling the absence of low-income Americans. The CEO of Dine Brands – owner of Applebee’s and IHOP – counted CNBC this week that low-income diners are visiting their restaurants less frequently.
How much have fast-food chains raised prices?
Fast food prices have soared in the last decade, according to for FinanceBuzz. The personal finance website found that the price of a McDonald’s Quarter Pounder with Cheese meal has more than doubled in price, from $5.39 in 2014 to $11.99 this year.
Other restaurant chains have also increased their prices, FinanceBuzz said. Between 2014 and 2024, Popeye’s, Jimmy John’s and Subway increased food prices by 86%, 62% and 39%, respectively. The price of a two-piece chicken combo at Popeyes jumped from $6.49 to $11.39 during that time, while an 8-inch club tuna at Jimmy Johns rose from $5.75 to $9. 10, according to FinanceBuzz.
FinanceBuzz obtained its data by selecting 10 menu items from each fast-food chain, using third-party sites like fastfoodmenuprices.com and menuwithprice.com to check menu prices in 2014, 2019 and 2024.
To be sure, prices for menu items at fast-food restaurants can vary greatly by state. While prices are set at the corporate level for some fast-food restaurants, in others they are determined by individual franchise owners.
Why are fast food prices rising?
Restaurant chains point to rising labor costs as a key factor driving prices. In the US, 22 states increased their minimum wage in January, even though the federal base wage remains stagnant at $7.25 per hour. In California, fast-food chains with 60 or more locations across the country are now required to pay their workers a minimum wage of US$20 per hour following the passage of a new law last fall.
Labor advocates dispute that rising employee wages are responsible for rising fast-food costs. A march analysis of California fast-food restaurants by the Roosevelt Institute, a liberal think tank, noted the industry’s record profit margins.
“Our analysis of financial data over the past decade reveals increases in the fast-food industry’s operating profits and widening profit margins, suggesting that affected employers can absorb the increased operating costs associated with a higher minimum wage in the industry without increase consumer prices or reduce employment,” the report said. the report states.
Jack in the Box, Jimmy Johns, McDonald’s, Popeyes, Subway and Yum did not respond to CBS MoneyWatch’s requests for comment.
For now, companies seem to be pursuing reward points programs, discounts and mobile applications in an effort to keep customers loyal. But McDonald’s CEO Chris Kempczinski acknowledged the impact of last month’s price hike on an earnings call.
“[A]crossing nearly every major market, industry traffic is slowing,” Chris Kempczinski told Wall Street Analysis. “McDonald’s has a long history of being the preferred destination for value and it is imperative that we continue to keep accessibility at the forefront for our customers.”
