Navigating Inflation Impact On Fast Food: McDonald’s, Wendy’s, Burger King

Consumers still go to fast food chains – despite inflation take tolls on their wallet.

In May, the cost of food out-of-home rose 7.4% from a year ago, but according to a new report from placer.aiAmericans will eat out at fast food restaurants as much as in 2021 and at some fast food giants, Americans will eat out even more.

In the report, which was generated by anonymous location data from a panel of 30 million mobile devices, which Placer.ai then uses with AI and machine learning to estimate overall visitor locations, Shira Petrack, Placer.ai marketing content manager, said. that the fast-service restaurant industry “appears to maintain relatively stable visiting patterns”.

Compared to May 2021, pedestrian traffic is higher in May 2022 at McDonald’s, up 21.7%, and at other fast food locations, including Wendy’s, up 5% and Burger King, up 4.1%.

This spike in foot traffic is because Americans are slowing down their spending. In the month may, US retail sales fell 0.3% but when it comes to fast food, deals and bargains can lure Americans in.

According to Lydia Boussour, Oxford Economics Lead US Economist, consumers could trade upscale restaurants for less expensive options as they “rearrange” their spending priorities to allocate “a larger portion of their budget to services and more expensive necessities” such as gas, food, and more. and shelter.

However, Boussour stressed that there is “a pent-up demand for services such as eating out”.

“In this high inflation environment, some consumers will be more likely to move from more expensive dining experiences to cheaper fast food options,” she told Yahoo Finance.

DALY CITY, CALIFORNI - FEBRUARY 15: A car drives through the drive-thru at a Burger King restaurant on February 15, 2022 in Daly City, California.  Restaurant Brands International, Burger King's parent company, reported strong fourth quarter results that exceeded analyst expectations with $1.55 billion in revenue.  (Photo by Justin Sullivan/Getty Images)

DALY CITY, CALIFORNI – FEBRUARY 15: A car drives through the drive-thru at a Burger King restaurant on February 15, 2022 in Daly City, California. Restaurant Brands International, Burger King’s parent company, reported strong fourth quarter results that exceeded analyst expectations with $1.55 billion in revenue. (Photo by Justin Sullivan/Getty Images)

Despite the opportunity to buy cheaper meals on the go, consumers cannot ignore the historic cost increase.

Peter Saleh of BTIG, who has been reporting on the restaurant industry since 2008, says the industry is raising prices for menus “considerably more than in the past”.

On average, price increases were about 2%, but in 2022 the increases were 6-8%, with “some cases even higher than that” due to commodity and labor inflation.

Nick Setyan of Wedbush says Chipotle (CMG) in particular is a “unique animal” like digital sales increase for the chain† When everyone is “feeling the crunch,” consumers are eager to save $5 to $10 on delivery costs, plus tip, and so they order through the app for in-store pickup or the Chipotlane.

at Chipotle (CMGVisitor numbers increased by a whopping 51.5 percent in the month of February compared to 2021. Placer.ai’s Petrack found that in-store and online orders “don’t have to come at the expense of each other.”

Brooke DiPalma is a producer and reporter for Yahoo Finance. Follow her on Twitter at @Brooke DiPalma or email her at [email protected]

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