A sign is posted in front of a McDonald’s restaurant on February 06, 2024 in San Leandro, California.
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A top McDonald’s executive is weighing in on claims that the company has jacked up its prices.
Joe Erlinger, president of McDonald’s USA, said in an open letter Wednesday the average price of McDonald’s menu items is up around 40% since 2019. The breakdown comes in response to claims on social media from House Republicans, among others, that the fast food company upped prices by more than 100%.
“Americans across the country are making tough calls about where to spend their hard-earned money,” Erlinger said. “And while we’ve been working hard to make sure our fans have great reasons to visit us, it’s clear that we — together with our franchisees — must remain laser-focused on value and affordability.”
Erlinger said the average price of a Big Mac meal today is $9.29, up 27% from $7.29 in 2019. The price for a 10-piece McNuggets meal is up 28% over the same period, and the price of medium french fries increased 44%.
Erlinger added the cost increases are tied to similar increases in input costs like crew salaries and cost of goods.
“For a brand that proudly serves nearly 90% of the U.S. population every year, we feel a responsibility to make sure the real facts are available,” Erlinger said.
Consumer prices have increased 3.4% over the last year, according to the latest data from the Bureau of Labor Statistics. In response to persistently steeper costs, some consumers are pulling back across the restaurant industry, a trend that has not spared the fast food giant.
McDonald’s recently reported same-store sales below expectations in their first-quarter earnings report. The company will also soon offer a $5 value meal for roughly a month, beginning on June 25.
That offering will include a McChicken or McDouble, four piece chicken nuggets, fries and a drink, CNBC previously reported.
Analysts at BTIG characterized the promotion as “more about value perception than profit driver.”
“In our view, this new deal is more about value perception, seeking to change the media narrative around McDonald’s recent price hikes to refocus around a deep(er) value offering. We believe the new one-month meal deal could actually hurt sales (check decline) and margins, but help reinstate McDonald’s as a value leader in the industry,” the analysts said in an investor note.
An independent advocacy group of McDonald’s franchisees is pushing to make the discounted offering sustainable for operators, saying it would require greater investment from the company if it sticks around menus beyond the initial monthlong run.
“There simply is not enough profit to discount 30% for this model to be sustainable. It necessitates a financial contribution by McDonalds,” the board of the National Owners Association wrote in a letter to membership that was viewed by CNBC.
