Fast Food

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School

Washington State University *

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Course

102

Subject

Economics

Date

Feb 20, 2024

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docx

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Uploaded by CaptainComputer13281

Linenberger 1 Gabriela Linenberger Dr. Prera EonS 102 Assignment 1 The Impact of Rising Costs on Fast Food Menus Fast food has long been a staple of modern life, offering convenient and affordable dining options to millions of people worldwide. However, due to a shift in supply and demand as well as rising prices, fast food is becoming less convenient, and companies work to balance their prices with their spending. The impact of these changes directly affects the consumer and their own decisions when considering fast food purchases. One of the primary factors driving up costs for fast food chains is the increase in ingredient prices. The rise in prices can also be attributed to rising labor costs. As these costs rise, fast food establishments can either choose to take the blow or adjust the prices and proportions of their products. Heather Haddon’s article Burger King, “Domino's Pull Back on Value Menus as Costs Rise; Other restaurant chains are also shrinking portions or offering fewer discounted items; some customers take notice”, in the Wall Street Journal discusses the strategies used by corporations. Haddon makes note of Domino’s and Burger King's shared strategy of “reducing menu discounted prices” and “shrinking portions to improve margins” (Haddon, 2022). While other companies such as McDonald’s stick to raising prices on products such as soda to balance out the rising prices on supply. The menu adjustments of reducing portion sizes,

Linenberger 2 altering recipes, or discontinuing certain menu items, while keeping menu prices in check, can also disappoint loyal customers, potentially affecting brand loyalty. Rising costs have a direct impact on consumers. Fast food becomes less of an affordable dining option, particularly for lower-income individuals and families, and can have consequences for both the consumer’s budgeting choices and the company’s profits. Consumers may potentially be less inclined to buy fast food or simply choose to dine out less frequently, affecting fast food chains' sales and profitability. While consumers are expressing disapproval with the rising prices and lower quality, according to Di Lewis’s article “Fast Food Industry Trends, Stats, and Analysis for 2022” on SynergySuite, the fast-food industry is still expected to continue growing in value, quickly recovering after the covid set back with anticipation to further their profits. In response to rising costs, fast food chains are also innovating and adapting. These restaurants aim to maintain profitability without compromising on customer experience. Chains are introducing more transparent pricing structures and marketing strategies to help consumers understand the value they receive despite higher prices. With the understanding of the necessity on large corporations’ ends for the price rises and changes within their menus, there can be a level of understanding on the consumer’s end. While this does not make up for the lower-income families facing budget struggles with the new prices and reduced proportions, it is not enough to stop fast-food corporations from raising prices in the future, as supply and labor costs strain their profits. The impact of rising on labor and supply of ingredients affects both the seller and the consumer. As ingredient prices continue to climb, fast food chains face the challenge of balancing profitability with affordability. This dilemma has led to menu adjustments and a need

Linenberger 3 for innovation within the industry. The implementation of different techniques to face these changes will need to balance out the industry’s spending as well as consumer demand. The future of fast-food menus will likely depend on how effectively these chains navigate these challenges, striking a balance that allows them to remain competitive while providing value to their customers.

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