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Fast-Food Fears: Rising Prices and Low-Income Diners’ Dilemma

by Nick

Rising food prices in the United States have prompted concerns among executives at fast-food chains like McDonald’s and Wendy’s, who fear losing business from low-income consumers. A recent survey by Revenue Management Solutions found that approximately a quarter of individuals earning less than $50,000 annually reported eating less fast food, with half making fewer trips to both fast-casual and full-service restaurants.

The surge in food costs, with a 20% increase from January 2021 to January 2024, has compelled budget-conscious diners to scale back their spending. For Lauren Oxford, a Tennessee musician and part-time bed-and-breakfast employee, escalating prices at McDonald’s have led her to opt for smaller menu items and ultimately reconsider her dining habits.

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The Federal Reserve’s Beige Book reports that low-income consumers across various regions are altering spending behaviors, seeking bargains and assistance from community organizations. Notably, a significant portion of Black and white American households earn less than $35,000 annually, making them a crucial demographic for fast-food chains.

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While historically fast-food companies pursued aggressive strategies to attract budget-conscious customers, the landscape is evolving. Rather than widespread menu reductions and broad discounts, chains are adopting targeted approaches, such as limited-time offers available exclusively through loyalty apps.

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McDonald’s and Wendy’s, for instance, are leveraging their existing value menus and loyalty programs to retain low-income customers. Wendy’s recently introduced a $1 burger accessible only through its app, while McDonald’s emphasizes affordability as a core brand value.

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Despite challenges posed by rising prices, some chains like Taco Bell report resilience among low-income markets. Andreas Garay, a retail worker in San Antonio, exemplifies this sentiment, expressing intent to continue patronizing McDonald’s despite ongoing price hikes.

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