- Inflation hits the food giant – McD and Chipotle
- Prices Hike between 4% to 7%
Economic data usually do not make headlines, but the latest update from Consumer Price Index (CPI) from the US pulled our attention. The Index rose to 7.9% in the last 12 months reporting the sheer increase since February 1982.
Biden’s economy is surely on a 40 year high and expected to even rise with various events happening across the globe. The steep hike in the price slabs is making the families with food prices, even at the fast food stores. With the price inflation the vendors like fast food chains, ice-cream vendors, and other-related to the same will have to surge the prices. The inflation is assumed to rise in the coming future with events like Russia Ukraine War, continuous lockdowns in China and Covid hitting the world map.
Food on Fire – Inflation Effects
In this hard time two of the most favored fast food chains – McDonald’s and Chipotle Mexican Grill are facing drastic downfall in customer footfall. The customers flattened by inflation are either choosing cheaper menu items or visiting the restaurants less often. The low-income customers are eventually shifting to the value menu, opting out from the regular combo orders. However, it is also adding to their benefits as customers are trading on low-cost fast-casual restaurants.
From a recently conducted market research it was found that restaurants menu prices have surged by 7%. Also the food lovers whose income is below 75000 USD have cut down the visits by 6%.
Even after being one of the best positioned food chains Mcdonald’s have faced such a cutdown for the first time, said Kempczinski. He added, food-chains have always performed up to the mark even at the times of economic slowdown, however, this is something different.
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Chipotle CEO Brian Niccol said, “ Maybe the low income customers have reduced the frequency, but most of our clients are higher household income customers”. The burrito chain is in subtle plans to raise the price by 4% in August in order to cover the rising costs for tortillas, avocados and the packaging process.
McDonalds and Chipotle Mexican Grill stated the decrease in the customer footfall due to economic disturbances. Even when the food chains have performed well at the times of economic slowdowns the question remains untouched why this is happening. If economical disruptions don’t get right soon, things may get adverse for the food chains.
Source: https://www.thecoinrepublic.com/2022/07/28/inflation-hits-the-food-giants-mcdonalds-and-chipotle/