Retail

Why Is McDonald’s So Expensive

By David Krug David Krug is the CEO & President of Bankovia. He's a lifelong expat who has lived in the Philippines, Mexico, Thailand, and Colombia. When he's not reading about cryptocurrencies, he's researching the latest personal finance software. 5 minute read

Do you recall how cheap a Big Mac and fries at McDonald’s used to be not so long ago?
Why is McDonald’s so pricey? You may have wondered if you’ve just visited? Keep reading to learn about the primary causes of the price increase!

Why is McDonald’s so Expensive In 2022?

Many reasons contribute to McDonald’s inflated costs, including the fact that the firm knows it has a loyal customer base and that food prices have risen significantly. With that said, the corporation is striving towards environmentally friendly packaging and eliminating artificial components in favor of natural ones.

After reading this, you’re probably even more curious about the high prices at McDonald’s. Keep reading to find out more!

McDonald’s Knows Customers Will Pay

When it comes to fast food, McDonald’s has a loyal following, and the firm knows it can count on them to keep coming back no matter what.

As a result, McDonald’s knows that even if it raises the pricing of all of its goods by $.30 each, customers would happily pay for the privilege of eating there. On top of that, McDonald’s has demonstrated over the years to the consumer that price hikes are worth it by consistently providing a consistent product.

Recycled Packaging

McDonald’s has been increasing the use of recyclable and sustainable packaging over the last few years, but this means that you, as a consumer, will have to pay extra for your food.

In addition, although the conventional styrofoam packaging was extremely inexpensive to produce, the changeover to eco-friendly packaging has been more expensive and the costs have been passed on to you.

The Dollar Menu Had Gone Missing

Once upon a time, McDonald’s offered traditional products such as a small fry for $1, but the Dollar Menu has since been updated. You’ll also see a modest price rise on goods that were previously exclusive on the Dollar Menu thanks to the introduction of the new $1, $2, and $3 Menu.

As a result of the previous Dollar Menu, eateries were forced to maintain their pricing lower than what they intended, resulting in revenue losses.

Shift Towards Quality Ingredients

McDonald’s has been trumpeting the fact that all of its menu items are made with 100% genuine beef, chicken, pig, and fish, but the higher-quality ingredients have pushed the prices up.

Natural flavoring and no fillers and additives have also been added to McDonald’s goods, which are now free of artificial flavoring. Furthermore, switching from artificial to natural tastes raises production expenses, which are ultimately passed on to consumers.

Premium Menu Items Can Be Increased in Price Without Imposing a Huge Cost

On lower-end menu items like cheeseburgers, McDonald’s offers a wide choice of alternatives, but you can’t really raise prices much. McDonald’s, on the other hand, has come to learn that boosting the cost of premium menu items is both feasible and flexible.

In addition, a Big Mac or Quarter-Pounder is a premium menu item and iconic, thus it’s likely to fetch a price of $6 rather than $3 for a basic cheeseburger.

Transportation & Deliveries are More Expensive

Because of the high demand for truck drivers and the low quantity of available drivers, the transportation and delivery of goods are more expensive than before.

In addition, because there are fewer truck drivers on the road, they have more deliveries to make and more businesses to deal with, which is placing a pressure on the drivers.

Higher Hourly Wages

Because McDonald’s is having difficulty attracting individuals who are interested in working in fast food, they have increased their hourly salary. As a result, McDonald’s pricing will rise to compensate for the additional $3 an hour that McDonald’s employees will be paid.

The Cost of Ingredients Is Increasing at an Unprecedented Rate

Food costs have risen sharply in recent months, and McDonald’s has also seen an increase in the cost of its supplies as a result. For example, rising ingredient costs mean that McDonald’s customers will eventually pay more for their favorite fast food items.

McDonald’s, on the other hand, has opted to raise the price of their iconic menu items rather than reduce the size of their portions like some other eateries.

As a result, McDonald’s isn’t generating nearly as much money as it did a few years ago since it hasn’t changed its serving sizes.

In addition, customers are now spending more money at the business, which implies that food and ingredients are in higher demand, affecting McDonald’s.

McDonald’s Increased Employee Benefits

Another reason why McDonald’s is so costly is because McDonald’s has expanded employee perks in order to attract more individuals to apply for employment.

In addition, in order to keep employees, McDonald’s must remain competitive with rival fast-food businesses, which is why perks are improving. Additional benefits include uniform costs, health insurance, parental and paternity leave, tuition help, additional paid time off and greater holiday pay for McDonald’s employees.

Research & Development

Research and development, which helps generate new menu items or modify the components of existing meal options, is another reason why McDonald’s hikes pricing.

Focus groups are also used at the test facility in Illinois to evaluate new goods, and things that are popular may be added to the restaurant’s menu.

Move Towards More Family Meals

For the past several years, McDonald’s and other fast food establishments have concentrated more on creating family meals, which are more costly but intended to serve a family of four.

It’s also a good idea for restaurants to offer combo meals or family dinners, which typically cost between $10 and $30, to improve earnings and sales. In addition, family dinners are available to assist offset the rising expenses of food.

Shipping Delays

Items that need to be imported from other countries have been particularly heavily impacted by shipping delays at McDonald’s during the last year.

In addition, a large number of cargo containers have been stuck in traffic congestion and have been unable to reach their destinations.

New Technology

Finally, the rising cost of McDonald’s is partly attributable to the use of modern technologies in the restaurants. You may pay for your food via a self-service kiosk or a cardless reader, which can be used with Apple Pay or Google Pay.

It’s also necessary to replace and improve kitchen and point-of-sale equipment on a regular basis.

Bottom Line

Hourly rates have risen, food components have risen dramatically, and shipping delays have all contributed to the high cost of McDonald’s.

Additionally, as McDonald’s struggles to find enough workers, employee perks have gotten better, and the company has shifted to more environmentally friendly packaging and products, which has pushed up pricing.

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