McDonald's will focus on making its food more affordable going forward after company leaders reported that spending by lower-income customers has gone down.
In a recent earnings call, McDonald's CEO Chris Kempczinski, said customers who made $45,000 or less have recently spent much less, finding that "eating at home has become more affordable."
He noted that lower-income Americans are particularly the hardest hit by high inflation.
"That consumer is pressured," he said of customers who make less than $45,000 a year. "From an industry standpoint, we actually saw that cohort decrease in the most recent quarter, particularly I think as eating at home has become more affordable."
According to the U.S. Bureau of Labor Statistics, prices of food made at home were up just 1.3% for 2023, while the price of food away from home went up 5.2%.
Kempczinski said that in the coming months, the company plans to focus on "affordability" and "absolute price point" rather than temporary deals.
"The battleground is certainly with that low-income consumer. And I think what you’re going to see as you head into 2024 is probably more attention to what I would describe as affordability," he said.
Several viral posts in recent months have featured the high cost of certain McDonald's, especially one at a rest stop in Darien, Connecticut, where a Big Mac meal costs $18 in person.
The meal from that specific restaurant on Grubhub is even more expensive, listed at $21.59 at press time.
Most McDonald's locations are owned by franchisees who are generally able to select their own prices, the company says.
The company is also bringing in the nostalgia factor to draw new customers. McDonald's opened the first of several spinoff restaurants called CosMc's in Bolingbrook, Illinois, in December. The small-format restaurants are space-themed with a focus on beverages and breakfast. It's based on McDonald’s beloved, extraterrestrial mascot from the ’80s and ’90s.
"One way consumers can find their ways going back in the doors of some of these QSR (quick service) restaurants is finding out what brought them there to begin with," Laura Murphy of Bolt PR told NBC News. "McDonald’s did this last year... they started to bring nostalgia back."
Meanwhile, Taco Bell is expanding its value menu to 10 items under $3. The company told NBC News it “remains dedicated to offering our fans delicious food at affordable prices.”
Yum Brands also showed weaker-than-expected growth in its top brands, which include KFC, Taco Bell and Pizza Hut, NBC News reports.
Chipotle, on the other hand, saw sales and foot traffic rise, despite a 3% hike in menu prices in October. CNBC reports the company saw a 7.4% rise in foot traffic in Q4.
