The Real Reason Fast Food Is So Expensive
Fast food prices are high because demand for fast food remains really high, despite those higher prices.
By guest author Jon Miltimore July 9, 2024
CATALYST – I recently drove to the local KFC and ordered a 12-piece meal to go. The price was just under $50 (tax included). Fortunately, I had a coupon that saved me some money, but I’d be lying if I said I didn’t feel some sticker shock.
Inflation has of course been a major issue in recent years, but fast food prices in particular seem high, and many consumers are getting angry about it.
McDonald’s recently took heat over news of an $18 Big Mac Meal that executives responded to by publishing an online letter, explaining that the price was unusually high.
“I can tell you that it frustrates and worries me, and many of our franchisees, when I hear about an $18 Big Mac meal being sold — even if it was at one location in the US out of more than 13,700. More worrying, though, is when people believe that this is the rule and not the exception.”
The $18 Big Mac meal (for now, served only in Connecticut) is indeed an outlier. The average price of a Big Mac in the US is $5.29, a 21-percent increase from 2019.
Still, data show the price of eating out has outpaced inflation in recent years, rising more than 40 percent since 2017, compared to a general inflation rate of 36 percent over the same time period. And looking strictly at major fast food franchises, the inflation gap gets wider.
Some people say high fast food prices are little more than “price gouging.”
“When I was a boy, Dad could take the family of five to McDonald’s for dinner for $1.35. Now it costs over $70 dollars,” one X user complained. “Corporate greed is destroying the country.”
The idea that McDonald’s wasn’t greedy in 1960, 1990, or 2010, but suddenly became greedy in the 2020s, doesn’t quite pass the economics smell test …
