A high-ranking executive at McDonald’s is addressing allegations that the company has raised its prices. In an open letter, Joe Erlinger, the president of McDonald’s USA, stated that the average price of McDonald’s menu items has increased by approximately 40% since 2019.
This statement was made in response to claims on social media, particularly from House Republicans, suggesting that the fast-food chain had raised prices by over 100%.
Erlinger emphasized that Americans are facing difficult decisions regarding their spending habits, and McDonald’s is committed to providing value and affordability to its customers. He revealed that the average price of a Big Mac meal is currently $9.29, a 27% increase from $7.29 in 2019. Similarly, the price of a 10-piece McNuggets meal has risen by 28% during the same period, and medium french fries have seen a 44% price increase.
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Erlinger attributed these cost increases to rising input costs, including crew salaries and the cost of goods. He expressed the company’s responsibility to ensure that accurate information is available to the public, considering that McDonald’s serves nearly 90% of the U.S. population annually.
The executive’s statement comes amidst a broader trend of increasing consumer prices, with a 3.4% rise over the past year, according to the Bureau of Labor Statistics. This trend has affected the restaurant industry, including McDonald’s, as some consumers are cutting back on spending. In response to these challenges, McDonald’s plans to introduce a $5 value meal for approximately one month, starting on June 25.
This meal will include options like a McChicken or McDouble, four-piece chicken nuggets, fries, and a drink. The promotion aims to provide customers with affordable choices. Analysts at BTIG have characterized this upcoming promotion as a strategic move by McDonald’s to address the current market conditions.
BTIG analysts characterized the promotion as primarily focused on shaping the perception of value rather than being a significant driver of profits. According to the analysts, the intention behind this new deal is to alter the media narrative surrounding McDonald’s recent price increases and instead emphasize a more affordable and value-oriented offering.
While the analysts acknowledge that the new one-month meal deal could potentially negatively impact sales and margins, they believe it will help reestablish McDonald’s as a leader in providing value within the industry. Meanwhile, an independent advocacy group representing McDonald’s franchisees is advocating for the discounted offering to be sustainable for operators. They argue that if the promotion continues beyond the initial month, it will require greater financial investment from the company.
The National Owners Association, the board of the advocacy group, asserts that discounting the prices by 30% is not financially viable for this model to be sustainable. They emphasize that McDonald’s will need to contribute financially to support the discounted offering.