While some improvement is on the horizon, rising food prices have been a particularly painful point for people across different income brackets. Data from the Bureau of Labor Statistics found that grocery prices rose 12% between November 2021 and 2022 while eating out is now 8.5% more expensive.
Price increases have significantly altered how many people shop and how often they go out. Last summer, insurance company Breeze found that 73% of American households cut back on restaurants and takeout to outpace inflation while 57% bought fewer or cheaper kinds of groceries.
One segment that has seen an unexpected boost is the fast food industry. While rising prices of beef and chicken has definitely dealt them a blow, many have also been seeing higher traffic from different groups of earners.
Placer.ai recently calculated that while overall restaurant visits fell 7.6% in July and 13.7% last August, McDonald's (MCD) and Chipotle (CMG) traffic rose by a respective 4.7% and 3.1%.
Price Increases At Wendy's, Taco Bell, Burger King
Menu tracking site Pricelisto.com calculated menu averages at different chains and found that Wendy's (WEN) made some of the biggest overall price hikes in the last year -- $4.90 for the average menu item in September 2021 and $6.63 in October 2022 for an increase of 35%.
Chick-fil-A prices rose 15.6% from $4.02 for an average menu item in 2021 to $4.65 in 2022. Yum! Brands (YUM)-owned Taco Bell saw price increases of 14.6% from $2.94 to $3.37.
While the average product at Restaurant Brands International (QSR)'s Burger King saw a price hike of only 2% from $5.03 to $5.14, certain items compensated for others. The popular Chicken Fries now cost 16% more ($4.64 now compared to $3.97 in 2021).
McDonald's prices, meanwhile, decreased from $3.97 in 2021 to $3.77 by October 2022 despite some big increases temporarily made during the summer. CFO Kevin Ozan Kevin Ozan said that the restaurant raised prices by 6% during a recent earnings call "to deal with the 4% commodity price increases or food and paper increases."
Likely due to the rising cost of chicken, Chick-fil-A's Grilled Chicken Sandwich is another item that has seen a particularly large price hike of 10% to $7.23 from $6.57 last fall.
Breaking the general poultry trend, Taco Bell's Chicken Quesadilla dropped in price from $5.82 in September 2021 to $4.56 in October 2022. These calculations are also an average around the country. Specific prices also vary by location depending on what's available in a given region.
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People Are Still Going to Eat a Lot of Fast Food
Despite the price increases, both foot traffic and stock performance data shows that many customers will both literally and metaphorically swallow the rising prices because the next best option of a casual sit-down restaurant is even more expensive.
Shares of McDonald's, Wendy's and Restaurant Brands International are all up year over year, The latter's stock is up nearly 12% from last year. Chipotle stock, meanwhile, is down more than 17% for the same time period while Yum's is at a slight annual downturn.
"With the busy lives we lead, turning to fast-food is the easiest option for many," says a Pricelisto spokesperson. "[...] The price of wages, transportation and energy all contribute to a higher end price for the consumer but larger chains such as McDonald's are able to mitigate this with brand deals and bulk buying."
