McDonald’s provided a rare dose of insight on the cost of a Big Mac and other menu items on Wednesday as it hit back at what it calls “inaccurate” information on the impact of inflation on its menu prices.
In an open letter to its customers, McDonald’s USA President Joe Erlinger said that the average price of a Big Mac in the U.S. is $5.29, an increase of 21% since 2019.
“I can tell you that it frustrates and worries me, and many of our franchisees, when I hear about an $18 Big Mac meal being sold, even if it was at one location in the U.S. out of more than 13,700,” Erlinger wrote. “More worrying, though, is when people believe that this is the rule and not the exception, or when people suggest that the prices of a Big Mac have risen 100% since 2019.”
“The average price of a Big Mac in the U.S. was $4.39 in 2019,” he added. “Despite a global pandemic and historic rises in supply chain costs, wages and other inflation pressures in the years that followed, the average cost is now $5.29. That’s an increase of 21% (not 100%).”
The company also shared prices for a select group of items, which have increased a range of 20% to 44% over the past five years.
On average, McDonald’s notes, its menu prices have increased 40% at its restaurants since 2019. That largely matches input costs for food, worker salaries and paper.
The comments demonstrate the impact that publicity about McDonald’s and its prices is having on the company and its franchisees.
McDonald’s does not dictate prices. Franchisees set prices based on local market conditions using consultants. They have raised those prices largely in response to their own inflationary concerns, notably labor and food costs.
The company as such rarely publicizes anything about average prices on a nationwide basis, outside of those it sets for marketing purposes, such as $5 value meals or dollar menus.
Yet prices have become a major point of focus for consumers, particularly on social media, as publicity about some of the more extreme prices around the country have been used to shed a light on rising prices for fast food.
Some of the prices being cited have been extreme, with one website suggesting that the price of a Big Mac has doubled since 2019. Those prices have become political fodder for both liberals and conservatives seeking to bash either corporate “greed” or liberal policies.
Regardless, it’s clearly impacting the reputation for fast food chains and their prices. Nearly 80% of consumers said in a Lending Tree survey that fast food is now a luxury and two-thirds said they are dining out less because of prices.
Walmart now believes it is getting more business from fast-food restaurants because of value differentials between the two industries.
All this is impacting traffic throughout the industry. Most major chains lost customers in the first quarter and sales at restaurants have been slowing for months amid concern about value. McDonald’s in response is planning a $5 value meal next month and several other chains, including Burger King, Wendy’s and Jack in the Box, are following suit.
Fast-food prices have been increasing at a faster rate than inflation, and particularly so when compared to grocery prices. Limited-service restaurant prices increased 0.4% last month, compared with a drop of 0.2% at grocery prices.
Erlinger noted consumer concerns about prices. “Americans across the country are making tough calls about where to spend their hard-earned money,” he wrote. “And while we’ve been working hard to make sure our fans have great reasons to visit us, it’s clear that we, together with our franchisees, must remain laser-focused on value and affordability.”
Erlinger promised that value and pricing will be “an area of conversation and focus in the coming months.” But he also noted that operators have worked hard to “minimize the impact of price increases” on its customers.
“This includes everyday prices on our restaurant menu boards to special limited-time offers,” he wrote. “That’s why prices for many of our menu items have risen less than the rate of inflation and remain well within the range of other quick service restaurants. It’s also why more than 90% of U.S. franchisees are offering meal bundles for $4 or less.”
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