Amid economic hardships in the United States, McDonald's CFO Ian Borden said that lower-income Americans prefer cooking at home instead of eating out at the fast food chain's restaurants.
A sign is posted in front of a McDonald's restaurant on April 28, 2022 in San Leandro, California. (Photo : Justin Sullivan/Getty Images)
Lower-Income Americans Are Eating at Home Than Mcdonald's
Ian Borden said at an investor conference on Wednesday that US consumers struggle with inflation, rising interest rates, and shrinking savings. According to Borden, these economic challenges are causing many people to rethink their spending, especially eating out.
"Some of those consumers are just choosing to eat at home more often," said Borden, as CNN reported.
Recent Consumer Price Index data shows a large price difference between restaurant and home meals. Restaurant costs have risen 4.5% over the last year, while food at home expenses have increased 1% year over year.
It is a significant shift from a year ago when eating out was still cheaper. Restaurant prices at that time rose 8.4% last year, while grocery prices rose 10.2% year over year.
Due to this behavior change, McDonald's is adjusting to attract consumers. Borden announced plans to sell $4-or-less bundles at 90% of its US restaurants.
"We want to make sure the consumer knows what's available and obviously is thinking of us when they're making their choices," Borden noted, as CNN reported.
Laura Murphy, managing director of Bolt PR, said that the most important factors in attracting new customers are fast food establishments' cost and convenience.
McDonald's Is Trying to Attract Budget-Conscious Americans
McDonald's CEO Chris Kempczinski also stressed affordability to attract budget-conscious customers in the changing market.
The company will emphasize long-term pricing above promotions as the fast food giant also struggles internationally, especially in the Middle East, where geopolitical unrest has hurt sales.
McDonald's said most of its stores are franchised, allowing them to set their own prices. Several economic indicators indicate that prices of groceries or eating out are looking better than they have in years since the onset of the COVID-19 pandemic, which may help consumers.
According to CPI data, food inflation has been increasing slowly since May 2021. Price increases at the grocery store have been at their lowest level since June 2021, while food inflation at restaurants has been up by the least amount since July 2021.
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