Higher prices aren’t just causing Americans to cut back on dining at fast-food chains, they’re changing the perception of fast food itself.
Nearly 80% of Americans now consider fast food a “luxury,” according to a survey released last week by Lending Tree. Seventy- eight percent of respondents said yes when asked, “Fast food has gotten more expensive, and I now view it as a luxury.”
The view is most acute by people who make less money or who have kids, according to the survey. Among those making less than $30,000 per year, 83% now consider fast food a luxury, along with 82% of those with kids older than 18 and 80% of those with kids younger than 18. Eighty one percent of Gen X respondents and 80% of women also agreed with that phrase.
The good news for fast-food chains is a lot of people use them: Seventy-five percent of respondents eat out at fast-food concepts at least once per week.
The bad news is those prices. Sixty-two percent of consumers said higher prices are forcing them to cut back and 65% said they’ve been shocked by the high price of a fast-food bill over the past six months.
The survey results, while not surprising, still provide a sobering view of the state of fast-food prices and consumers’ overall views of the quick-service restaurant industry.
A growing amount of attention is being paid to rising prices at fast-food chains, which stand as a symbol of inflation coming out of the pandemic.
Limited-service restaurants raised prices 0.4% in April, continuing a run of rising menu prices brought on by a combination of high labor costs, high food costs and rising ancillary costs such as insurance and interest rates.
Yet they have also wiped out fast-food chains’ perception of value among the U.S. consumer, especially as prices elsewhere ease. Retail food prices declined 0.2% in April and grocery giants like Walmart believe they are getting more customers from restaurants.
Quick-service restaurant executives such as McDonald’s CEO Chris Kempczinski agree.
The result has forced the fast-food sector into a value war as a succession of quick-service chains report weak traffic and distribution giants like Sysco suggest higher prices are hurting sales among those brands.
McDonald’s, Wendy’s, Burger King and Jack in the Box are all preparing bundled value meals this summer in a bid to regain customer traffic.
Consumers believe fast-food restaurants should be cheaper than eating at home—a view agreed to by 67% of respondents in the Lending Tree survey, but 75% said that they were not.
More than half, 56%, said their go-to inexpensive meal was making food at home. Another 11% will eat prepared food from a grocery store.
A few other points from the survey:
Tread carefully on surge pricing. As if the reaction to Wendy’s “dynamic pricing” comments weren’t lesson enough, Americans do not like the prospect of surge pricing at fast-food restaurants. Seventy-eight percent of respondents are concerned about surge pricing at fast-food restaurants.
But maybe if you make it sound better. On the other hand, perhaps there is an opportunity for off-hours traffic, as 72% said they would be more likely to dine off-hours if provided with a discount.
Apps work. Forty-six percent of respondents use fast-food apps that entice them to visit more often. Mobile ordering has been one of the major industry victories of the past five years.
Chick-fil-A wins again. Twenty-five percent of respondents ranked the chicken sandwich chain as the most high-end fast-food chain, followed by Starbucks (22%) and Chipotle (21%). That should surprise nobody.
But maybe this should: Right behind was McDonald’s at 16%.
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