Pointing out that price hikes in the fast food industry, such as McDonald's, are rapidly driving away low-income customers
In the 2000s, McDonald's revived its struggling business by widely running a campaign called the 'Dollar Menu,' or '100 Yen Mac' in Japan. However, nearly 20 years have passed since then, and the fast food industry has found that price hikes have led to a significant decline in the number of customers from low-income groups, which had previously been its core customer base.
McDonald's is losing its low-income customers - Los Angeles Times
McDonald's, one of the world's largest fast-food chains, faced difficulties in the 2000s, including slowing growth, a plummeting stock price, and its first quarterly deficit. However, by introducing the 'Dollar Menu,' which standardized prices to $1 (about 100 to 110 yen at the time), McDonald's achieved a major turnaround, increasing sales for three consecutive years and increasing profits by 33%.
Better than 100 yen Mac, a complete introduction to the $1 menu at McDonald's in the US - GIGAZINE
The key to their success is thought to be the dramatic effect that their inexpensive menu items had on marketing to low-income customers who prioritize value for money.
However, according to McDonald's CEO Christopher Kempczinski, the fast food industry as a whole has seen a 'double-digit decline' in visits from low-income customers, who are the company's core customer base, while the number of high-income customers has increased by a similar amount.
The Los Angeles Times quoted a McDonald's executive as saying, 'Rising costs essential to running a restaurant, such as beef and labor, are driving up prices, driving away low-income customers who are already struggling financially with rising prices for food, clothing, rent and childcare.'
Economist Adam Josephson cited the food, automobile, and airline industries as examples of companies that should be concerned about the impact of increased burdens on low-income earners, and described this trend as a polarization of consumer behavior, or a '
For example, among hotel chains, while budget chains saw a 3.1% decrease in revenue compared to the same period last year, luxury hotels performed well, increasing by 2.9%.
The economic hardship of low-income earners is also reflected in the delinquency rate for consumer loans. While it has remained stable for high- and middle-income earners, the delinquency rate for those earning less than $45,000 a year has increased significantly compared to the previous year.
Marisa DiNatale of research firm Moody's Analytics said that restaurant prices have increased by 3.2% year-on-year, which is higher than the inflation rate, and that the increased prices of goods due to tariffs are hitting low-income earners hard.
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However, DiNatale said that the companies believe that further price increases will not be supported by consumers.
The '$1 menu,' which once attracted low-income customers, disappeared by 2013 due to inflation, making it impossible to maintain prices. Is it possible that a wallet-friendly menu will be offered again?
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