Fast food has operated for over a century. Largely able to trace its roots to classic French peasant dishes that gave cheap and readily available cuts of meat style and flavor, it took America by storm. Of all the things that are quintessentially American, fast food is one of the top things on the list, and McDonald’s is the most iconic of those companies.
On their earnings call on February 5th, Chief Financial Officer Ian Borden was left with no choice but to admit to investors that McDonald’s had finally done it. They had killed off their main customer base. Claiming he now knows customers are more wary of pricing, he took the idiot’s way out of admitting the conglomerate had made a mistake. If anyone had even bothered realistically talking to their employees, they would know people across the globe were price-watching more carefully now than ever before.
With consumers taking to social media more and more to express their displeasure with a situation, they are absolutely upset with what they get from McDonald’s. Given their average 10% price increase in 2022 and again in 2023, consumers are taking a step back and realizing that the value they remember is gone. With franchises setting their own pricing, Borden implied that customers should know that they weren’t really at fault for the pricing, but he expected inflation to slow the price hikes in 2024.
CEO Chris Kempczinski honed in on the foundation of their customer base: the working class. “Where you see the pressure with the US consumer is that low-income consumer. Call it $45,000 and under. That consumer is pressured. 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.”
In response to this, Kempczinski announced their D123 plan, or a revitalization of their $1, $2, and $3 deals on food and drinks. Simply getting them to come back is the main obstacle. The news that the mid-high income diners market share was continuing to rise seemed to please him, but it seems that he’s not understanding the data right.
The reason rich people like Trump enjoy places like McDonald’s is that it’s simple. The food was historically priced very reasonably. Ingredients were very predictable, and they would taste nearly identical anywhere you go. It was this simple formula that made fast food so damn popular in the first place. When McDonald’s started changing formulas to turn a 15-cent profit margin into a 17-cent one, and it impacted the entire taste of the lineup, people left.
Messing with that formula pushed people away. When the Golden Arches stayed up through the pandemic, many relied on it as a “safe” way to get food, and to ensure they could eat. Inflating their price as the science experiments on the food continued, many ultimately left.
Now, McDonalds claims 2024 will be an all-new year. They have announced changes to the menu, including bigger burgers, the return of a more meat-based patty, and better buns. In essence, they’ll be bringing McDonalds back to the 1990s when the food was real, the coffee was hot, and the stupid ice cream machine worked.
