Inflation Redefines ‘Value’ at McDonald’s, Other Fast Food Chains

If a value menu deal seems too good to be true, there is a good chance that the restaurant agrees — as food prices continue to rise, some brands are finding their dollar menus too difficult to maintain. McDonald’s, for one, is raising its value menu cheeseburger price by as much as 20% in the United Kingdom.

The Guardian reported Wednesday (July 27) that the burger chain is raising the price of its 99p cheeseburger to £1.19, the first increase in 14 years, citing rising food costs and alluding to similar price increases to come in the near future.

“This summer our restaurants will be adding between 10 and 20p to a number of menu items impacted most by inflation,” said Alistair Macrow, CEO of McDonald’s UK and Ireland, according to the outlet. “We understand that any price increases are not good news, but we have delayed and minimized these changes for as long as we could.”

According to a recent news release from the United Kingdom’s Office for National Statistics, consumer prices for food and non-alcoholic beverage prices in the country rose 9.8% year over year in June 2022, a marked increase from their +8.7% year-over-year rise in May. Additionally, restaurant and accommodation prices rose 8.6% year over year in June after rising 7.6% year over year in May.

The news comes after the Wall Street Journal reported earlier this month that, in the United States, in 16 of McDonald’s 56 domestic markets, local co-ops voted to advertise value menus instead of dollar drinks to make it possible for them to raise the prices of beverages.

“Franchisees set prices and have the flexibility to create promotions that will drive demand locally,” the restaurant brand told the outlet.

Related news: Amid Rising F&B Prices, McDonald’s Locations Pull Dollar Drinks

In the United States, overall food prices increased even more dramatically in the same period. The Consumer Price Index for All Urban Consumers (CPI-U), reported by the U.S. Bureau of Labor Statistics (BLS) earlier this month, revealed that food prices rose 10.4% year over year in June. Food away from home (i.e., restaurant) prices, meanwhile, rose 7.7%.

Given that McDonald’s tends to be a leader in the quick-service restaurant (QSR) space, it is likely that, as the company continues to raise prices on its value offerings, other brands will soon follow suit. Other dollar deals may soon have to revise their names to value menus as brands rethink their pricing.

At the start of this year, QSR pizza giant Domino’s announced in a presentation at the 2022 ICR Conference that it was changing its $7.99 carryout chicken wing deal, making the offer exclusively available through digital channels and reducing the number of wings per order from 10 to eight.

Read more: Brands Turn to off-Premise Formats to Boost Profit Margins

Meanwhile, Costco, for its part, has been holding fast to one of its key value menu items, no matter how impractical the deal becomes. The company’s CEO stated earlier this month that the brand’s hot dog deal, $1.50 for the hot dog and a 20-ounce soda, which has been in effect since 1985, is not going anywhere.

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