McDonald's is losing its low-income customers
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Re: McDonald's is losing its low-income customers
#2> “Happy Meals at McDonald’s are prohibitively expensive for some people, because there’s been so much inflation,” Josephson said.
I find the phrasing odd. It is because corporations have raised prices that inflation has increased. Rising prices aren't a result of inflation.
Re: McDonald's is losing its low-income customers
#3The cost increases are real: beef, wheat, labor. Some of it is from inflation during the covid period, some it is from the Russia-Ukraine invasion causing havoc in fuel and grain supplies globally.
There is currently a beef shortage in Europe (of sorts). The reason is that buying cow feed has gotten too expensive/unpredictable.
I think people generally underestimate the global impact of shutting down production in Europe's bread basket, Ukraine. There is a reason Russia wants this land. It's, as usual, a war for natural resources.
Re: McDonald's is losing its low-income customers
#4I’m trying to be illustrative through glibness here, but…
If consumers can’t afford the prices required to pay a restaurant’s labor living wages, then perhaps they’re not viable customers of that restaurant.
Minimum wages above the market-set rate are a form of price control. The distorting effects of price controls—in this case, contributing to shortages of low-margin restaurant meals—are economically inevitable.
Re: McDonald's is losing its low-income customers
#5The cost increases are real: beef, wheat, labor. Some of it is from inflation during the covid period, some it is from the Russia-Ukraine invasion causing havoc in fuel and grain supplies globally. There is currently a beef shortage in Europe (of sorts). The reason is that buying cow feed has gotten too expensive/unpredictable. I think people generally underestimate the global impact of shutting down production in Eu…
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Re: McDonald's is losing its low-income customers
#6Perhaps this is a good thing? Are people eating healthier home-made foods now?
Re: McDonald's is losing its low-income customers
#7I feel like this whole article is seeking to 'maximize engagement', which I'm using as a lofty euphemism for trolling its readers.
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Mariam Gergis, a registered nurse at UCLA who also works a second job as a home caregiver, said she’s better off than many others, and still she struggles. “I can barely afford McDonald’s,” she said. “But it’s a cheaper option.”
On Monday morning she sat in a booth at a McDonald’s in MacArthur Park with two others. The three beverages they ordered, two coffees and a soda, amounted to nearly $20, Gergis said, pointing to the receipt. “I’d rather have healthier foods, but when you’re on a budget, it’s difficult,” she said.
Her brother, who works as a cashier, can’t afford meals out at all, she said. The cost of his diabetes medication has increased greatly, to about $200 a month, which she helps him cover.
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Re: McDonald's is losing its low-income customers
#8> “Happy Meals at McDonald’s are prohibitively expensive for some people, because there’s been so much inflation,” Josephson said. I find the phrasing odd. It is because corporations have raised prices that inflation has increased. Rising prices aren't a result of inflation.
No, inflation is a monetary and political phenomenon. Companies cannot set prices arbitrarily, in particular not the fast food industry which faces what is probably the strongest competition on the planet. The entire restaurant industry does not collude on the prices of burgers.
In this particular case it's wage-push inflation. The lowest quintile of workers has seen very strong wage gains among other reasons because of tight labour markets and minimum wage legislation, which on the consumer side prices a lot of people out of the service economy.
Re: McDonald's is losing its low-income customers
#9In 2005 McDonald's net profit margin was ~12%, today it's ~30+%. Obviously that doesn't account for the entire price increase and wouldn't make that much of a difference...but worth noting.
Re: McDonald's is losing its low-income customers
#10I’m trying to be illustrative through glibness here, but… If consumers can’t afford the prices required to pay a restaurant’s labor living wages, then perhaps they’re not viable customers of that restaurant. Minimum wages above the market-set rate are a form of price control. The distorting effects of price controls—in this case, contributing to shortages of low-margin restaurant meals—are economically inevitable.
It is quite the juggling act: you have employees demanding to be paid more, the cost of goods/inflation steadily rising, while customers wanting everything to be cheaper.
Something has to give somewhere, the challenging part would be to know where.