McDonald’s Australia menu price increases outpacing inflation

Fed-up McDonald’s customers have declared they’re breaking up with the fast-food chain, citing “ridiculous” prices, declining quality and service.

Rising cost-of-living pressures are causing consumers to think twice about hitting the drive-through or ordering UberEats, experts say, as analysis suggests Macca’s price increases have been “well beyond” the inflation rate.

The price of a large fries has increased by more than 50 per cent since 2019, from $3.20 to $4.85 as of this month, while a classic angus burger is up more than 25 per cent from $7.95 to $10.

“That’s pretty significant — this is coming amid a time when everyone is focusing much more on bang for their buck due to cost of living,” said Graham Cooke, head of consumer research at Finder.

The comparison site’s ongoing monthly consumer sentiment tracker survey has found stress caused by the cost of groceries has increased “the most dramatically of any category over the last three years”, from 15 per cent to 41 per cent, to be on par with worries about paying rent or a mortgage.

“Because of that people are focusing much more on the cost of food, not only in the grocery store but restaurants and fast-food places, they’re analysing their spending much more than previously,” Mr Cooke said.

“These outlets are not spared from the scrutiny.”

One customer shared a photo on social media this week of McDonald’s “Loose Change” menu featuring a 24-piece nuggets for $11.95, asking, “How can now $12 be loose change?”

“Loose change includes $10 notes now,” one person replied.

Another branded it “ridiculous”. “Remember when hamburgers were $1, and chicken and cheeses were $3?” they asked.

That came after another dad shared a viral rant about realising his relationship with McDonald’s was “over”, following a poor experience taking his kids to get Happy Meals.

“Macca’s truly is s**t now,” he wrote on Reddit.

“$27 for three meals and a few fat dad extras. All three drinks were slightly more than half full, not even overfilled with ice. I waited for one of the teenagers to notice me, asked them if they could please fill our drinks up. Took them without a word, and it was while I was watching her passive aggressively punching numbers on the drinks dispenser that I realised this relationship was over.”

That prompted a flood of users expressing similar sentiments.

“Everything is worse but I really knew they were taking the p**s when they stopped flurrying the McFlurrys,” one said.

Another said, “It’s just unreal to me that anybody would pay $15 for a meal at Macca’s these days. It’s also strange how there are always UberEats guys hanging outside which must mean that plenty of people are still buying it.”

A third wrote, “Their burgers are objectively terrible even for fast food. If they’re not cheap anymore, what do they offer?”

Prices for restaurant meals and takeaway food rose 5.7 per cent in the 12 months to December, according to the latest inflation data released by the Australian Bureau of Statistics last week.

The overall food and non-alcoholic beverages category was up 4 per cent, with bread and cereal products up 7.7 per cent.

But fruit and vegetable prices fell 2.2 per cent and meat and seafood fell 1.9 per cent over the year.

Over the past four years, prices for takeaway and fast food have increased faster than restaurant meals, ABS figures show.

Fast food prices in December 2023 were 19.6 per cent higher than in December 2019, while restaurant meals increased 17.1 per cent in the same period.

While fruit and vegetable prices have begun to ease, potatoes in particular have “had a tear” since early 2020 and prices inflated disproportionately to other items, up around 27 per cent in that time.

“So McDonald’s has copped some genuine supply cost hikes,” Finder said in a recent analysis. “But they’re increasing their prices at a rate that absolutely boosts their profits well beyond the rate of inflation.”

Mr Cooke said even though there were often many supply chain costs adding up to the final price increase, customers usually blamed the end retailer.

It would be “interesting to see” if McDonald’s prices began to come down now that inflation had begun to ease across fresh food categories, he said, adding customers were much more attuned both to price and quality concerns now.

“Anecdotally we hear a great amount at the moment not just about price increases but shrinkflation — getting less for the same amount of money — and often you’re getting both at the same time,” he said.

“Aussies are more price sensitive now than at any time in the last five years we’ve been running this survey.”

A McDonald’s Australia spokeswoman said, “Like all businesses, we review our prices from time to time, considering several factors, including the higher-cost environment we are all operating in.”

The spokeswoman said McDonald’s was “committed to our ‘Value means more at Macca’s’ promise, which includes providing our customers with exceptional everyday value, great customer service, and 24/7 convenience”.

“Customers can get great value at McDonald’s through the MyMacca’s App — which offers great discounts, weekly deals and loyalty rewards — and through our year-round Loose Change Menu and Macca’s Bundles, which are available in participating restaurants nationwide,” she said.

“Our Loose Change Menu provides great value on some of our most iconic menu items, including Frozen Coke from $1, Soft Serve Cone with Flake for $1.50, Hamburger for $2, Happy Meal for $5.75, and more.”

It comes after McDonald’s chief executive Chris Kempczinski admitted this week that the burger giant’s sales had taken a hit as skyrocketing menu prices have turned off core customers — and signalled the chain plans to focus on “affordability” this year.

The Chicago-based behemoth — which was recently slammed in the US a Big Mac combo meal priced at nearly $US18 ($28) — said its global same-store sales in the latest quarter had grown just 3.4 per cent, falling short of the 4.7 per cent growth Wall Street had expected.

The lacklustre quarter — which the company also blamed on conflict in the Middle East that has slammed franchisees overseas — sent McDonald’s shares on the New York Stock Exchange tumbling nearly 4 per cent, to $US285.97, at Monday’s close.

“I think what you’re going to see as you head into 2024 is probably more attention to what I would describe as affordability,” Mr Kempczinski said on a Monday earnings call with analysts.

In particular, low-income customers making less than $US45,000 ($69,400) per year have largely stopped ordering from McDonald’s. Pummeled by inflation, they’re eating at home more frequently as grocery prices come down, Mr Kempczinski admitted.

“Eating at home has become more affordable,” Mr Kempczinski said. “The battleground is certainly with that low-income consumer.”

Despite the uproar, McDonald’s customers should brace for even more price hikes this year — albeit at a slower pace of 2 per cent to 3 per cent versus last year’s 10 per cent, restaurant analyst Mark Kalinowski told the NY Post.

McDonald’s attempts at “affordability” will likely take the form of targeted deals offered on its mobile app, he predicts.

“App discounts will be a big part of their arsenal,” Mr Kalinowski said.

Last week, a McDonald’s outpost in Connecticut got slammed over its “outrageous pricing” after a customer was charged $US7.29 ($11.24) for an Egg McMuffin — and nearly $US5.69 ($8.77) for a side of hash browns.

In July, a franchisee in nearby Darien, Connecticut, was called out for charging $US17.59 ($27.11) for Big Mac combo meal. That location also sold a Quarter Pounder with Cheese and Bacon meal that came with fries and a drink for $US19 ($29), according to viral posts.

McDonald’s said it expects US growth to moderate to between 3 per cent and 4 per cent compared to its 4.3 per cent US growth in the most recent quarter. Most of that growth came from “increased menu prices”, the company said.

Meanwhile, all the company’s business regions worldwide registered positive growth with the exception of the Middle-East, where McDonald’s franchisees have seen a “meaningful business impact”, Mr Kempczinski said in January via a LinkedIn post.

The burger boss also has blamed “misinformation” about McDonald’s position on the Israel-Hamas war, echoing other companies including Starbucks who have said that boycotts of their stores were due to a false narrative that they had taken a position on the war.

McDonald’s has 1032 restaurants in Australia and more than 40,000 worldwide.

— with NY Post

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