Corporate America may be reaching the limits of its ability to continually raise prices, especially as consumers in certain markets express dissatisfaction. McDonald’s, known for its ability to raise menu prices without impacting sales, is now acknowledging the need to address affordability concerns.
CEO Chris Kempczinski addressed McDonald’s affordability issue as the company reported weaker-than-expected sales at its US stores. He acknowledged that eating at home has become more affordable compared to dining out, with grocery prices rising only 1.3% in 2023 while dining out surged 5.2%.
The pressure on lower-income consumers, a crucial demographic for McDonald’s, is evident, with Kempczinski noting a decrease in customers making $45,000 or less in the most recent quarter.
While McDonald’s had previously boasted about its ability to raise menu prices without affecting sales, Kempczinski’s recent focus on affordability indicates a shift in strategy. Although specific details about price cuts were not provided, McDonald’s reiterated its commitment to offering affordable options to consumers.
Social media has become a platform for consumers to voice their frustrations over McDonald’s prices, with viral stories and TikTok videos highlighting the perceived high costs of basic items like hash browns or French fries.
McDonald’s has traditionally found that wealthier customers are less affected by price increases, but the focus now seems to be on retaining the loyalty of lower-income consumers. Kempczinski hinted at a potential return of the Dollar Menu and emphasized the importance of pricing items between $1 and $3 to address affordability concerns.