Food Giants Struggle in Inflation Economy

Despite inflation continuing its downward trend from its 2022 peak, high prices have persisted, causing big fast-food chains to struggle to keep this anxiety from impacting sales, reports Quartz.

Executives contend that inflation perception is impacting pricing, foot traffic, and growth plans.

“There’s definitely some belt tightening,” Jerry Sheldon, VP of market research firm IHL Group, said of inflation-weary customers. “What consumers are saying is ‘woah, wait a minute.’”

At McDonald’s the Big Mac and fries are not as attractive an offer as they once were. The chain is having issues with competition as prices increase. In 2023 the chain raised menu prices by 10 percent. The data firm FinanceBuzz noted that, since 2014, its menu prices went up by 100 percent with some items, including its McChicken sandwiches and medium-sized fries, increasing by almost 200 percent over the period. This has led to a drop in overall sales year-over-year.

The slowdown is a wakeup call, said McDonald’s CEO Chris Kempczinski. He said, “consumers are more discriminating with every dollar that they spend.”

The report found that ecommerce giant Amazon also sees consumers pulling back on purchases. In response, the platform has adjusted its food-selling strategy to compensate.

“Consumers are spending but they’re just being really careful about what they spend on and how much they spend,” Amazon CEO Andy Jassy told CNBC last week. “And so, wherever they can, they’re trading down an average selling price. You see consumers wherever they could find a deal, they take the deal.” Full Story