6 ms·

Most of the McDs around me are already paying $17-20 (in Minnesota, including rural areas) and the menu prices reflect it. We recently have begun to pay >$50 fo

Most of the McDs around me are already paying $17-20 (in Minnesota, including rural areas) and the menu prices reflect it. We recently have begun to pay >$50 for a family of four. For context: the two cheeseburger meal is now just under $11. Subway is the same thing, with most sandwiches topping $10/ea and totals coming out around $50 for four of us. What is interesting, however, is that we're not witnessing this with traditional restaurants and/or fast casual spots. I wonder if they will catch up or if this sort of wage inflation or shove McDs out of the fast food category.

reaperman 3y ago
Those are very similar to the prices we’re paying in Houston, for what its worth. Generally about $12 per person for a basic fast food meal. McDonalds, What-a-burger (our version of In-n-Out), Wendy’s, Raising Canes, its all about $12/pp.
jvalencia 3y ago
I see the same thing re: not seeing this with traditional restaurants. I'm always shocked that taking Chili's to go is cheaper than fast food.
- ramesh31 3y ago
  > I'm always shocked that taking Chili's to go is cheaper than fast food. That's because the quality is even worse. Chili's (and Applebees) make almost zero profit on their food, it's just a loss leader to get people in the door and keep them drinking. The entire business model is real estate + cheap booze. The food just allows them to operate as a restaraunt instead of a bar, which is much easier to license in most places.
gdulli 3y ago
I've also noticed that the economics of fast food make no sense anymore compared to groceries and casual restaurants. Inflation has hit everything, but fast food has not retained the relative discount. A footlong basic chicken sub at a Subway near me is $13. A "Supreme Meats" is over $18. A "Beast" (whatever that is) is $21! All without a side or drink. Taco Bell and Wendys are similarly out of my guilty pleasure rotation. The discount was part of the basic contract we had with bottom tier food.
- tschwimmer 3y ago
  What I've noticed is there there is a huge "app subsidy" (drive through tax?) for many fast food chains. For example, Taco Bell has a $6 online-only combo that's probably 40-60% discount over the drive-thru menu equivalent. I've noticed similar things with other chains as well. As a business strategy, this makes some minor amount of sense since the app orders are transparently more efficient than drive through orders (say name and get food vs read menu and then "can I get uhhhhhh"). I also suspect online orders probably on average larger than drive up orders because it's easier to order more. On the other hand, there is very very minimal advertising of the app at the store. That sort of makes sense too - App orders probably have lower margin because the price sensitive customers are using it. So you don't want to steer your price insensitive customers to it if you don't have to. Overall, it's actually a nice case of price discrimination.
  - gdulli 3y ago
    I will absolutely not install an app to order food. But if it means Taco Bell is no longer part of my diet I'll take it as a win.
    - fragmede 3y ago
      Is it just a general fear of technology as to why or is there some other reason why you don't want to install an app?
      - gdulli 3y ago
        I don't want to maintain an account and surveillance footprint on my phone for every brand or restaurant I deal with. I don't ever get delivery and prefer to eat on site rather than get takeout so I don't have a need to order ahead anyway. But I'm happy to order from an in-store kiosk once I get there.
        fragmede 3y ago
        Fair. To each their own. I didn't make an account to use <redacted>, and the convenience of putting in my order before I walk over there means it's ready when I get there so I have more time to enjoy eating it at the park nearby.
jstarfish 3y ago
> What is interesting, however, is that we're not witnessing this with traditional restaurants I think they've buffered against this a little by reducing wait staff and/or coming up with novel justifications to skim their earned tips. Also restaurants downgrading to fast-casual (a brewery near me now makes customers dispense their own soft drinks, leaving the single bartender to bus food and tend bar).
OfSanguineFire 3y ago
Considering that the USA has higher salaries overall than Norway or Switzerland and comparable cost of living, it seems like the USA is just catching up and being on the level one would expect it. In those countries, a fast-food meal is around US$20. Traditional restaurants and/or fast casual spots in the USA involve “mandatory” tipping, so even if menu prices are lower, I would assume that the total meal price is higher once one includes the tip, which nowadays is up to at least 20% if not 25%. I remember a Facebook thread that drew some angry wait staff posting things like “You better tip X% or you’re going to get some nastiness in your food next time”, and they were mainly coming from low-end chains.
- garciasn 3y ago
  Fast casual does not have 'mandatory' tipping, but traditional restaurants do. Fast casual and fast food have started to include the tip options on credit card POS machines, but it's running into some public backlash.
  - dartos 3y ago
    Yeah I mean tipping is weird. At least in Florida, if you’re an employee that makes tips, your employer can pay you less than min wage as long as the tips bring you to at least min wage. I never understood why this was a thing. If you just charge more for the food, you don’t need to put the onus of paying your staff literally directly on the customer
- rngname22 3y ago
  Total comp + benefits + social welfare for a fast food worker in Norway or Switzerland is far better than the equivalent for a fast food worker in Minnesota, the price rising in Minnesota to match Norway would not be commensurate as the Minnesota worker has far worse lifestyle economically.
  - OfSanguineFire 3y ago
    I wasn’t thinking of the fast-food workers but rather the clientele. With American salaries being as high as they are, and a lot of other things in life being priced relatively high, I would have expected the American fast-food industry to easily get away with raising prices up to $20/meal, at least in some US markets.
jiofj 3y ago
>We recently have begun to pay >$50 for a family of four. It's incredible how inflated prices for fast food are. It's the same crap as always but it costs the same as going to a real restaurant.
lancesells 3y ago
> Most of the McDs around me are already paying $17-20 (in Minnesota, including rural areas) and the menu prices reflect it McDonalds had $1.9B in profit in 2022. $1.6B in 2021. Starbucks had $3.3B in profit in 2022. $3.6B in 2021. Subway announced they had beaten sales plans by $1.4B in 2021. It's not the wages that are the issue making the prices go up. These companies aren't hurting for profit.
- jfghjhgfjhfg 3y ago
  [dead]
- credit_guy 3y ago
  > McDonalds had $1.9B in profit in 2022 Out of curiosity, what does that mean? It appears to me the main business of McDonald's is to collect franchising fees. Most McDonald's fast food joints (93%) are owned and operated by independent local business owners, who have to pay McDonald's-the-company the frinchising fees, which are about $45k/year [1]. So, I can see how McDonald's, the company, can be highly profitable, while individual stores could be barely surviving. [1] https://www.investopedia.com/articles/insights/072516/cost-buying-mcdonalds-franchise-mcd.asp https://www.investopedia.com/articles/insights/072516/cost-b...
  - sschueller 3y ago
    Don't they also pay % on top of the franchise fee as well as are required to purchase all the food and werez from Macdonalds which I assume also got more expensive.
  - yunohn 3y ago
    AFAIU McDonald’s sets menu prices, so presumably they make sure franchises can be net positive despite item costs and fees.
  - verall 3y ago
    Sure, and if those individual franchises start failing or finding other corporate overlords, then McDs profits may go down and they may have to reduce those fees in order to remain competitive. Such is capitalism. Does this equilibrium-finding method create undo misery and stress for the franchise owners? I would say yes. If franchisees banded together to negotiate in order to extract better fee arrangements from McDs without going through individual bankruptcy, well...
rtpg 3y ago
I don't think the wage increases are the biggest input to the increase in sandwhich pricing. Some random Quora answer says that you might see 50-120 orders served at peak per McDonalds employee. Increasing the price by... what, 50 cents? Is already looking at an extra $25-$60. Peak hours of course, but given that the McDonalds business model is mostly "sell drinks at pure profit, sell food at cost", price changes at best are just linked to raw materials costing more, and other expenses. Cynicailly: most of that price increase is not landing in workers pockets. Some other random website states that wages are 20% of a McDonald's franchisee's costs. So I bet a part of the cost is for wages, but most of it is probably about everything else.
- WWLink 3y ago
  Yea but milking the customers and blaming the employees is a great way to make profit!
  - Yeul 3y ago
    It was an American called Henry Ford who realised that if you pay your workers enough they will also buy your products. I consider wages to be a feedback loop system in the consumer economy that America is.
    - WWLink 3y ago
      Word. I'm just pointing out that they like to blame the price hikes on increased wages when there's no way the wages are causing costs to go up that much.
jimmaswell 3y ago
$11 seems fine to me for a two cheeseburger meal today.
- singleshot_ 3y ago
  I’m under fifty and cheeseburgers at McDonald’s were seventy nine cents when I was a kid.
Buttons840 3y ago
On a macro level, there's an employee shortage (which is good, because the alternative is a job shortage), and over time workers will shift away from the least important jobs. Arguably, fast food workers are some of the least important jobs, judging from pay. In the long run fast food might stop existing, or rather, the fast food worker might stop existing, replaced by machines or other food sources.

reaperman 3y ago

Those are very similar to the prices we’re paying in Houston, for what its worth. Generally about $12 per person for a basic fast food meal. McDonalds, What-a-burger (our version of In-n-Out), Wendy’s, Raising Canes, its all about $12/pp.

jvalencia 3y ago

I see the same thing re: not seeing this with traditional restaurants. I'm always shocked that taking Chili's to go is cheaper than fast food.

ramesh31 3y ago
> I'm always shocked that taking Chili's to go is cheaper than fast food. That's because the quality is even worse. Chili's (and Applebees) make almost zero profit on their food, it's just a loss leader to get people in the door and keep them drinking. The entire business model is real estate + cheap booze. The food just allows them to operate as a restaraunt instead of a bar, which is much easier to license in most places.

gdulli 3y ago

I've also noticed that the economics of fast food make no sense anymore compared to groceries and casual restaurants. Inflation has hit everything, but fast food has not retained the relative discount. A footlong basic chicken sub at a Subway near me is $13. A "Supreme Meats" is over $18. A "Beast" (whatever that is) is $21! All without a side or drink. Taco Bell and Wendys are similarly out of my guilty pleasure rotation. The discount was part of the basic contract we had with bottom tier food.

tschwimmer 3y ago
What I've noticed is there there is a huge "app subsidy" (drive through tax?) for many fast food chains. For example, Taco Bell has a $6 online-only combo that's probably 40-60% discount over the drive-thru menu equivalent. I've noticed similar things with other chains as well. As a business strategy, this makes some minor amount of sense since the app orders are transparently more efficient than drive through orders (say name and get food vs read menu and then "can I get uhhhhhh"). I also suspect online orders probably on average larger than drive up orders because it's easier to order more. On the other hand, there is very very minimal advertising of the app at the store. That sort of makes sense too - App orders probably have lower margin because the price sensitive customers are using it. So you don't want to steer your price insensitive customers to it if you don't have to. Overall, it's actually a nice case of price discrimination.
- gdulli 3y ago
  I will absolutely not install an app to order food. But if it means Taco Bell is no longer part of my diet I'll take it as a win.
  - fragmede 3y ago
    Is it just a general fear of technology as to why or is there some other reason why you don't want to install an app?
    - gdulli 3y ago
      I don't want to maintain an account and surveillance footprint on my phone for every brand or restaurant I deal with. I don't ever get delivery and prefer to eat on site rather than get takeout so I don't have a need to order ahead anyway. But I'm happy to order from an in-store kiosk once I get there.
      - fragmede 3y ago
        Fair. To each their own. I didn't make an account to use <redacted>, and the convenience of putting in my order before I walk over there means it's ready when I get there so I have more time to enjoy eating it at the park nearby.

jstarfish 3y ago

> What is interesting, however, is that we're not witnessing this with traditional restaurants I think they've buffered against this a little by reducing wait staff and/or coming up with novel justifications to skim their earned tips. Also restaurants downgrading to fast-casual (a brewery near me now makes customers dispense their own soft drinks, leaving the single bartender to bus food and tend bar).

OfSanguineFire 3y ago

Considering that the USA has higher salaries overall than Norway or Switzerland and comparable cost of living, it seems like the USA is just catching up and being on the level one would expect it. In those countries, a fast-food meal is around US$20. Traditional restaurants and/or fast casual spots in the USA involve “mandatory” tipping, so even if menu prices are lower, I would assume that the total meal price is higher once one includes the tip, which nowadays is up to at least 20% if not 25%. I remember a Facebook thread that drew some angry wait staff posting things like “You better tip X% or you’re going to get some nastiness in your food next time”, and they were mainly coming from low-end chains.

garciasn 3y ago
Fast casual does not have 'mandatory' tipping, but traditional restaurants do. Fast casual and fast food have started to include the tip options on credit card POS machines, but it's running into some public backlash.
- dartos 3y ago
  Yeah I mean tipping is weird. At least in Florida, if you’re an employee that makes tips, your employer can pay you less than min wage as long as the tips bring you to at least min wage. I never understood why this was a thing. If you just charge more for the food, you don’t need to put the onus of paying your staff literally directly on the customer
rngname22 3y ago
Total comp + benefits + social welfare for a fast food worker in Norway or Switzerland is far better than the equivalent for a fast food worker in Minnesota, the price rising in Minnesota to match Norway would not be commensurate as the Minnesota worker has far worse lifestyle economically.
- OfSanguineFire 3y ago
  I wasn’t thinking of the fast-food workers but rather the clientele. With American salaries being as high as they are, and a lot of other things in life being priced relatively high, I would have expected the American fast-food industry to easily get away with raising prices up to $20/meal, at least in some US markets.

jiofj 3y ago

>We recently have begun to pay >$50 for a family of four. It's incredible how inflated prices for fast food are. It's the same crap as always but it costs the same as going to a real restaurant.

lancesells 3y ago

> Most of the McDs around me are already paying $17-20 (in Minnesota, including rural areas) and the menu prices reflect it McDonalds had $1.9B in profit in 2022. $1.6B in 2021. Starbucks had $3.3B in profit in 2022. $3.6B in 2021. Subway announced they had beaten sales plans by $1.4B in 2021. It's not the wages that are the issue making the prices go up. These companies aren't hurting for profit.

jfghjhgfjhfg 3y ago
[dead]
credit_guy 3y ago
> McDonalds had $1.9B in profit in 2022 Out of curiosity, what does that mean? It appears to me the main business of McDonald's is to collect franchising fees. Most McDonald's fast food joints (93%) are owned and operated by independent local business owners, who have to pay McDonald's-the-company the frinchising fees, which are about $45k/year [1]. So, I can see how McDonald's, the company, can be highly profitable, while individual stores could be barely surviving. [1] https://www.investopedia.com/articles/insights/072516/cost-buying-mcdonalds-franchise-mcd.asp https://www.investopedia.com/articles/insights/072516/cost-b...
- sschueller 3y ago
  Don't they also pay % on top of the franchise fee as well as are required to purchase all the food and werez from Macdonalds which I assume also got more expensive.
- yunohn 3y ago
  AFAIU McDonald’s sets menu prices, so presumably they make sure franchises can be net positive despite item costs and fees.
- verall 3y ago
  Sure, and if those individual franchises start failing or finding other corporate overlords, then McDs profits may go down and they may have to reduce those fees in order to remain competitive. Such is capitalism. Does this equilibrium-finding method create undo misery and stress for the franchise owners? I would say yes. If franchisees banded together to negotiate in order to extract better fee arrangements from McDs without going through individual bankruptcy, well...

rtpg 3y ago

I don't think the wage increases are the biggest input to the increase in sandwhich pricing. Some random Quora answer says that you might see 50-120 orders served at peak per McDonalds employee. Increasing the price by... what, 50 cents? Is already looking at an extra $25-$60. Peak hours of course, but given that the McDonalds business model is mostly "sell drinks at pure profit, sell food at cost", price changes at best are just linked to raw materials costing more, and other expenses. Cynicailly: most of that price increase is not landing in workers pockets. Some other random website states that wages are 20% of a McDonald's franchisee's costs. So I bet a part of the cost is for wages, but most of it is probably about everything else.

WWLink 3y ago
Yea but milking the customers and blaming the employees is a great way to make profit!
- Yeul 3y ago
  It was an American called Henry Ford who realised that if you pay your workers enough they will also buy your products. I consider wages to be a feedback loop system in the consumer economy that America is.
  - WWLink 3y ago
    Word. I'm just pointing out that they like to blame the price hikes on increased wages when there's no way the wages are causing costs to go up that much.

jimmaswell 3y ago

$11 seems fine to me for a two cheeseburger meal today.

singleshot_ 3y ago
I’m under fifty and cheeseburgers at McDonald’s were seventy nine cents when I was a kid.

Buttons840 3y ago

On a macro level, there's an employee shortage (which is good, because the alternative is a job shortage), and over time workers will shift away from the least important jobs. Arguably, fast food workers are some of the least important jobs, judging from pay. In the long run fast food might stop existing, or rather, the fast food worker might stop existing, replaced by machines or other food sources.