Fast food has become increasingly expensive — and some consumers are changing their spending habits because of it.
Fast-food chains such as Chick-Fil-A and Taco Bell are included in the limited-service meals and snacks category in the consumer price index report, which shows prices are up nearly 28% from 2019 to 2023. The full-service meals and snacks category, which covers sit-down restaurants with servers, meanwhile, has increased about 24% and overall CPI was up by about 19% in the same time period.
“There were increased commodity costs. We’ve seen those start to normalize,” said Stephens analyst Jim Salera. “But what continues to be ahead of historical averages is the increase in labor costs that restaurants are seeing.”
Chains such as Wingstop and Chipotle are passing these costs on to their customers, especially in states such as California, where the minimum wage has increased to $20 an hour.
Now the pressure is catching up. Yum Brands, which owns KFC, Taco Bell and Pizza Hut, reported earnings that missed analysts’ estimates for the first quarter of 2024, while McDonald’s reported mixed results and said consumers are being cautious with their spending.
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