McDonald's Menu Is Driving Away Cash-Strapped Customers

McDonald's menu is getting too expensive for cash-strapped diners.

The company said its prices increased 3% through the end of June, compared to the previous year, Bloomberg's Leslie Patton reports.

Even McDonald's cheapest menu items are getting more expensive. The Big Mac chain expanded its dollar menu last year to include items that cost more than $1, and changed the name of the menu to the "Dollar Menu and More."

A Double Quarter Pounder with cheese, fries and a drink now totals about $7.50 at some Chicago locations, Patton reports.

That's too costly for customers like 58-year-old Mark Hiner, who said he no longer takes his grandsons to McDonald's and instead visits rivals such as IHOP, Denny's and Chili's.

"Those meals are the same price," Hiner told Patton. "And they're better."

Rising food prices and frustrated franchisees have been pressuring McDonald's to increase prices.

Wholesale beef prices are up more than 28% over last year, according to the USDA.

And franchisees have been complaining that the Dollar Menu is a drain on profits.

"Free coffee. Dollar Menu. $2.99 Happy Meal. Idiotic marketing plan by corporate," one franchisee said in a recent survey by Janney Capital Markets.

"I am just hoping to be flat," said another franchisee. "Customer has lost faith in the brand. We have no image."

McDonald's same-store sales in the U.S. have fallen for four straight months. The company will report third quarter earnings on Tuesday.