Fast-food prices surged faster than inflation the past decade

(NewsNation) — Fast food has long been an affordable dining option, but over the past decade, Americans have seen menu prices skyrocket faster than inflation.

Since 2014, fast-food restaurants have raised menu prices by 60%, nearly double the rate of inflation over the same period, according to a recent FinanceBuzz analysis of twelve different chains.

According to the study, prices at McDonald’s have gone up the most, surging 100% over the past ten years. These days, a Quarter Pounder with Cheese meal will set you back $11.99 on average, up from $5.39 in 2014, per the report.

Other chains, including Popeyes (+86%), Taco Bell (+81%), Chipotle (+75%) and Jimmy John’s (+62%), have also hiked prices much faster than inflation over the past decade, FinanceBuzz determined. Meanwhile, Starbucks and Subway (+39%) have raised prices almost in line with inflation.

Part of the recent increase can be attributed to higher labor costs, which have swelled more than 30% at limited-service restaurants over the past four years.

The price pressure from higher wages has become a hot-button issue in California, where most fast-food workers now make at least $20 an hour after a new law took effect in April.

“It absolutely helps those folks that are getting the paycheck on Friday, but it absolutely hurts their core customer who can’t afford to go there on Friday,” said Dan Roccato, a clinical professor of finance at the University of San Diego.

In the run-up to the change, California led the nation in menu price inflation, according to Dataessential, a food and beverage analytics company.

Which chains have raised prices the most?

Across the dozen chains analyzed by FinanceBuzz, menu prices at McDonald’s rose the fastest from 2014 to 2024, followed by Popeyes and Taco Bell.

However, prices can vary significantly from city to city. For example, last year, a Big Mac sandwich cost as little as $3.49 in Oklahoma but more than $8 in Massachusetts, according to the McCheapest price tracker.

Part of the gap between restaurant chains is likely due to different franchising models, Roccato pointed out. McDonald’s franchisees, who own the majority of U.S. stores, may be more responsive to changes in local labor costs, whereas Starbucks doesn’t franchise at all.

“McDonald’s franchisees are given a high level of autonomy in setting menu prices for individual locations, which can make it difficult to accurately source historical data to compare to the present,” FinanceBuzz noted in the report.

When reached by email, a McDonald’s spokesperson said the study’s numbers are inaccurate and added that the 2024 prices cited are “significantly inflated.”

“As the report itself notes, pricing is set by individual franchisees and varies by restaurant,” the company told NewsNation.

The spokesperson did not say how much menu prices have changed over the past decade.

Inflation: +31% across all items (Jan. 2014 to Jan. 2024)

Change in average menu prices for ten popular items over the past decade, per FinanceBuzz:

1. McDonald’s: +100%
2. Popeyes: +86%
3. Taco Bell: +81%
4. Chipotle: +75%
5. Jimmy John’s: +62%
6. Arby’s, Wendy’s, Burger King, Chick-fil-A: +55%
7. Panera Bread: +54%
8. Starbucks, Subway: +39%

Which popular fast food items are more expensive?

Former staples of the McDonald’s dollar menu, the McChicken and McDouble, now cost around $3 on average, the analysis found.

Taco Bell’s Beefy 5-layer Burrito and Chalupa Supreme are also twice as expensive as a decade ago. At Wendy’s, a small Frosty will set you back twice as much compared to ten years ago.

Here’s which popular menu items are up the most, according to FinanceBuzz.

McDonald’s:

• McChicken
  • 2024: $2.99
  • 2014: $1.00
  • Price increase: +199%
• McDouble
  • 2024: $3.19
  • 2014: $1.19
  • Price increase: +168%
• Medium Fries
  • 2024: $3.79
  • 2014: $1.59
  • Price increase: +138%
• Quarter Pounder with Cheese meal
  • 2024: $11.99
  • 2014: $5.39
  • Price Increase: 122%

Popeye’s

• Regular Mashed Potatoes and Gravy
  • 2024: $4.19
  • 2014: $1.79
  • Price Increase: +134%

Taco Bell

• Beefy 5-layer Burrito
  • 2024: $3.69
  • 2014: $1.59
  • Price Increase: +132%
• Chalupa Supreme
  • 2024: $4.59
  • 2014: $2.19
  • Price Increase: +110%

Wendy’s

• Small Frosty
  • 2024: $2.09
  • 2014: $0.99
  • Price Increase: +111%

Where will prices go from here?

Moving forward, Roccato expects price hikes to slow down as fast-food giants see their core customers push back.

“To the extent that consumer becomes more stretched, more stressed, [fast food chains] are going to respond in kind,” he said.

During the company’s quarterly earnings call in February, McDonald’s CEO Chris Kempcinzski said there was a drop-off in visits and spending among customers who made $45,000 or less per year.

“The battleground is certainly with that low-income consumer,” Kempcinzski said. “And I think what you’re going to see as you head into 2024 is probably more attention to what I would describe as affordability.”

McDonald’s is expected to report slower sales growth for the fourth consecutive quarter during its earnings call Tuesday, according to Reuters. However, the company’s net income grew 37% from roughly $6 billion in 2022 to almost $8.5 billion in 2023.

Other fast-food chains have also re-prioritized affordability recently.

Earlier this month, Wendy’s ran a promotion offering some of its most popular items for $1 through its app. In January, Taco Bell launched a new Cravings Value Menu with ten items for $3 or less.

But Californians may have to grapple with rising prices a bit longer. Over the past two months, chains like Chick-fil-A (+10.6%), Starbucks (+7.8%), Chipotle (+6.9%) and Taco Bell (+4.9%) have all raised prices in major California cities, the Wall Street Journal reported.