Expensive fast food meals are surely transitory.
Dont worry about it.
In an attempt to increase sales and profits, and to offset rising food costs at the same time, fast-food chains like McDonalds, KFC, and Wendys have started to move away from cheap items on their menus, replacing them with new, pricier meals, Reuters reports.
The strategy, which reportedly lifted year-on-year sales at limited- service restaurants by 11.5% last month, is aimed at paring back $5- and-under value items in favor of more expensive $10-to-$30 combination meals.
Profit margins are also up at several major chains, according to data from Black Box Intelligence.
Value menu items are not really profit drivers. Theyre designed to drive traffic, BTIG analyst Peter Saleh told the agency, adding that the Covid-19 pandemic also forced fast-food chains to stop developing new items.
KFC reportedly stopped offering $5 Fill Ups a pot pie or chicken dish, with a drink, cookie, and sometimes a biscuit aimed at individuals in 2020. Instead, the chain promotes family meal deals that cost around $30.
Dominos Pizza has suspended its half-price pizza promotion for online orders, saying it doesnt need its Boost Week discount to drive store traffic.
Wendys, one of the oldest US chains, has also replaced its value menu, which was introduced in 1989 and included 99-cent items. Instead, it now offers the Spicy Pretzel Bacon Pub which costs $7.
Id pay $70 for that without thinking.
The drastic measures are reportedly imposed by the market, as high commodity costs are forcing franchisees to find ways to maximize profits, according to Credit Suisse analyst Lauren Silberman, who said that many chains increased their margins during the pandemic.
However, this strategy may alienate lower-income customers, including hourly workers, at a time when restaurants are reopening and the government has stopped granting subsidies.
According to data revealed by NPD Group, about 39% of fast-food visits in May were made by customers with household incomes of $100,000 or more. Those making less than $25,000 comprised about 12% of visits, and people with incomes between $25,000 and $100,000 made up 49% of visits.
Yes, weve talked about this before many times rich people eat garbage food.
But that isnt the point here.
The point here is: everything is getting more expensive and it is going to keep getting more expensive.
Of course, businesses dont want to be held personally responsible for inflation, so instead of just charging extra for the exact same thing, they will change their menus around to sell you the same thing for more money.
Related: Janet Yellen Explicitly Denied Incoming Hyperinflation (She Actually Said the Word Aloud)
Whatever tricks the government and businesses pull, youre going to eventually end up with the difficult fact that your money simply isnt worth very much anymore.
When youre paying $80 trillion for a sloppy pretzel burger, youre probably going to wish you would have bought the dip.
Ill be eating steak with the homies, while youre too poor to buy a new shirt after you stained it with pretzel grease.