- McDonald's menu prices are up about 10% this year. That's on top of a 10% bump last year.
- Chipotle has raised prices five times since June 2021.
Inflation may be slowing, but when it comes to skyrocketing fast-food prices, the damage is done — and there's no turning back.
"Inflation has broken the levy wall of low prices at QSRs," said the restaurant consultant Tim Powell, referencing the industry term for "quick-service restaurants."
Over the past two years, chains such as McDonald's, Chipotle, Pizza Hut, and Starbucks have raised menu prices to combat high commodity costs and wages. Fast food, long known as one of the cheapest ways to eat, no longer feels affordable to many diners.
New federal data released earlier this month shows inflation is slowing, with consumer prices leveling. Retailers expect to offer deep discounts for the holidays, but restaurant prices remain on the uptick, especially at fast-food chains. The Bureau of Labor Statistics reported that fast-food prices in October jumped 6.2% over the past 12 months.
Expect the sticker shock at your local fast-food joint to continue.
Once chains boost menu prices, they "never lower prices," Mark Kalinowski, a veteran restaurant analyst, told Business Insider.
More price hikes are on the horizon
Chipotle recently raised menu prices by 3% in October. It was the fifth menu-price increase the chain has made since June 2021.
Californians can expect Chipotle prices to jump even more next year when the state implements a new fast-food law that will trigger wages to jump by about $4 to $20 an hour in April.
In its latest earnings call in October, McDonald's said it expects to have raised menu prices in the US by about 10% this year. That's on top of a 10% increase in fiscal year 2022.
"When you look at the average check of not just McDonald's but the wider restaurant industry, it is significantly up over the last couple years," Kalinowski said.
Like Chipotle, McDonald's restaurants in California might see prices increase next year because of the jump in hourly wages.
"I don't think, at this point, we can say exactly how much of that is going to work its way in through pricing," McDonald's CEO, Chris Kempczinski, told investors during last month's earnings call. "Certainly, there's going to be some element of that that does need to be worked through with higher pricing."
Starbucks hasn't ruled out more price hikes either.
During a recent earnings call, the chain said it has raised prices over the past fiscal year and will continue to look at "strategic pricing" opportunities. The chain told Business Insider that it does not disclose price increases as they vary by market.
Even value deals are getting more expensive.
Pizza Hut recently introduced a $7 Deal Lover's Menu. It features 17 different menu options for $7 each when consumers order two or more items. Choices include a medium one-topping pizza and eight pieces of boneless wings. The value deal used to be $5.
"As everyone in the restaurant industry has had to do, Pizza Hut took a step back to evaluate how they can offer guests great value while navigating the impacts of inflation," a chain rep told Business Insider in an email.
Remember Subway's $5 footlong deal?
The chain backed off the decadelong promotion in 2018 after getting pushback from franchisees. It returned in 2020, but consumers had to buy two sandwiches to get the deal.
"Our franchisees set their own prices and we provide guidelines to help balance value for our guests and franchisee profitability," the company said when asked about the footlong deal.
Dollar items appear to have vanished from the $1 $2 $3 Dollar Menu at McDonald's. BI reviewed menus from across the country earlier this year, and no value-menu items cost $1.
Consumers are fuming over inflated burger prices
Consumers, who have continued to spend despite high inflation, are starting to notice.
Some are fuming over skyrocketing fast-food prices and expressing their concern on social-media platforms such as TikTok and Reddit.
In March, a TikToker who goes by @xconmedia highlighted combo-meal prices at a McDonald's in Connecticut.
@xconmedia #mcdonaldsprices #stimulusmoney #inflation2023 #recession2023 #pricesgoingup
♬ original sound - Xcon Media ✩
"Well, well, well. Does anybody see the prices of these combo meals? The price of a Big Mac combo meal — $16.89," he says in the video which has logged more than 560,000 views and over 5,000 comments.
Ian Borden, the global chief financial officer at McDonald's, said franchisees "make their own pricing decisions." A majority of the company's more than 13,000 restaurants are owned by independent operators. Still, Borden told investors last month that McDonald's is an industry leader "in both value for money and affordability."
"We've obviously had elevated pricing levels on the back of elevated cost and inflationary pressures, that we have been able to execute that in a way that has minimized the resistance from the customer," he said during last month's earnings call.
There are deals to be had on apps, Kalinowski, the restaurant analyst said. He pointed to McDonald's free fries promotion, available every Friday, but only through the app.
However, the average check on mobile apps tends to be higher, as customers can feel emboldened to order more without worrying about judgment from employees.
Are you a fast-food insider? Got a tip? Email nluna@insider.com