Why are prices increasing so much in the fast food industry?

In my weekly newsletter, “Helpful Money Tips for You,” I included an item on how most fast food chains have raised prices by 60 percent on average over the last 10 years. Four who have raised prices even more are McDonald’s, Popeyes, Taco Bell, and Chipotle.

A reader wrote back and said the fast food article I had linked to said nothing about wages. She wondered if the prices increases were associated with states raising the minimum wage. Did it means that the cheap fast food in the past was due to low wages for workers?

I replied to her email that wage increases could be part of the rising costs along with the price of food purchased by fast food restaurants. However, I added, price gouging is a big part of inflation that doesn’t get much attention. I said I’d look into it.

It didn’t take long to find a price gouging link in the CBS News article “Inflation Is Cooling. So Why Are Food Prices, from Steak to Fast-food Meals, Still Rising.” The article states:

• The reason for inflation’s stubborn hold on food prices can be linked to a number of issues, from higher labor costs at manufacturers that trickle down to consumers, to record-low cattle numbers that are driving up the cost of beef and steak. 
• But some policy experts see other issues at work: Corporations, they claim, are increasing prices simply because they can. President Joe Biden last month warned that companies are “ripping people off” with a combination of price gouging, “greedflation,” and shrinkflation. 
• Greedflation refers to when companies hike product prices beyond the rate of inflation in order to juice their profits, Northeastern University economist William Dickens said in an article in Northeastern Global News. 

Below is a copy of my newsletter for this week. You can sign up to get future copies here:

Rita R. Robison Newsletter  1. File your income tax return even if you can’t pay all of what you owe or you’ll owe more. “Tax debt is not like wine,” Michelle Singletary, financial writer, says. “It doesn’t get better with age.” 2. Be aware that most fast food chains have raised prices by 60 percent on average over the last 10 years. Four who have raised prices even more are McDonald’s, Popeyes, Taco Bell, and Chipotle.   3. Take a look at these 11 mindsets that may actually be hurting your financial progress including: “It’s either all or nothing,” “I can’t afford that,” “More money will solve all my problems,” and “It’s O.K. to carry a balance on my credit card.”   4. Get up to $500 as part of a $45 million Walmart settlement. Anyone who purchased certain weighted goods – such as pork, poultry, seafood, or bagged citrus – at a Walmart store from October 19, 2018, through January 19, 2024, is eligible. When filling out the claim form, customers will be asked to provide receipts, proof of purchase, or other documentation, and will receive 2 percent of the total cost – capped at $500.   5. Take a look at this list of items that increased in price more than 10 percent in the last year, which includes motor vehicle insurance, 22.2 percent; repair of household items, 18 percent; and care of invalids and elderly at home, 14.2 percent   6. Get the “trusted traveler” designations – Global Entry, NEXUS, and SENTRI – before October 1 when they’ll cost $120, the first increase in 15 years.   7. Don’t expect to see “just walk out technology,” an AI-powered system that allows shoppers to go through the store and put items in their carts, bypassing a checkout line, in Amazon Fresh and Amazon Go stores any longer. However, Amazon will continue to offer the technology at stores in the United Kingdom, as well as in third-party retailers such as hospitals, airports, stadiums, and theme parks.    8. Check out these tips on how to get Peacock, a streaming service, for free for two weeks.   9. Save more to create security in your life, but the amount of your paycheck that you save depends on your age, how much money you have in a savings account, any debts you owe (interest rates and amounts), and whether you’re on track for retirement.   10. Watch out for high interest rates when you get a larger loan. A 36 percent interest rate that’s reasonable for some small loans can lead to high and unaffordable interest on a larger loan.    April 11, 2024 Thanks for subscribing to my newsletter. Tell your friends and co-workers about it so they can make savvy money choices, too. Here’s the sign up: https://tinyurl.com/makeyourmoneywork. And, for a big bonus, they’ll also get my free e-book on how to optimize their personal finance decisions.

Copyright © 2024 Rita R. Robison Consumer and Personal Finance Journalist, All rights reserved. You are receiving this newsletter because you requested it. Our mailing address is: Rita R. Robison Consumer and Personal Finance Journalist PO Box 1383 Olympia, WA 98507

Comments

[Beth Havey]

Hi Rita, I'm new and enjoyed all your research that you are sharing on your blog. We have simplified our lives as best we can, purchasing a hybrid car that doesn't need much gas; watching our electric bills by turning off lights, not blasting the AC in the summer, shopping at Target instead of high end stores. But we are happy, saving to travel to California and Boston where our daughters live. YOU ADJUST, you figure things out...and your post helps that along, Beth

[Rita]

Hi Beth,

Thanks for reading my blog. Congratulations on simplifying your lives and all your money saving efforts. It takes research and planning, but the rewards are great such as traveling to see your daughters.

[Beth Havey]

Your research is awesome, Rita. Reading your posts will teach me things...and that is a good thing.