Saturday, February 10, 2024

Why McDonalds Customers Earning Under $45,000 a Year Would Rather Eat at McDonald's Than Cook at Home


Regular readers of this blog know that Steven Johnson Grocerant Guru® at Tacoma, WA based Foodservice Solutions® has been proving industry leading insights at the intersection of cooking from home and eating out since 1991.  You also know that McDonald's is one of the most popular fast-food chains in the world, serving millions of customers every day. But not everyone who visits McDonald's is happy with their choice. According to the company's CEO, Chris Kempczinski, McDonald's has seen a decline in traffic from lower-income customers who make less than $45,000 a year. Why is that? And why do some of these customers still prefer McDonald's over cooking at home?


One of the main reasons is the price. McDonald's has raised its menu prices by about 10% this year, on top of a 10% increase last year. This is partly due to the rising costs of ingredients, labor, and transportation. But it is also a strategic move to attract more middle- and higher-income customers, who are trading down to McDonald's from more expensive restaurants. These customers are looking for quality, convenience, and variety, and McDonald's has been investing in improving its products, services, and digital platforms to meet their expectations.

However, this strategy has also alienated some of the lower-income customers, who are more sensitive to price changes and have less disposable income. These customers are feeling the pressure of inflation and interest rates, which have reduced their purchasing power and increased their debt. They are also facing more competition for jobs and housing, as well as higher health care and education costs. As a result, they have cut back on their spending, especially on non-essential items like eating out.

But that does not mean they have stopped eating at McDonald's altogether. Some of them still choose McDonald's over cooking at home for various reasons. One of them is convenience. Cooking at home requires time, effort, and skills, which not everyone has or wants to invest. It also requires access to a kitchen, appliances, utensils, and ingredients, which not everyone can afford or find. For some people, going to McDonald's is easier, faster, and more satisfying than preparing their own meals.

Another reason is habit. Some people have grown up eating at McDonald's and have developed a preference and loyalty for its food. They enjoy the taste, the variety, and the familiarity of the menu. They also associate McDonald's with positive memories, emotions, and social interactions. For some people, eating at McDonald's is a way of rewarding themselves, relaxing, or having fun with their friends and family.

A third reason is value. Despite the price increases, McDonald's still offers some of the cheapest and most filling options in the market. It also offers deals and discounts, such as the free fry’s promotion every Friday, to entice customers and maintain its value leadership. For some people, eating at McDonald's is a way of saving money, getting more for less, or indulging in a treat without breaking the bank.

McDonald's customers earning under $45,000 a year have different reasons for choosing McDonald's over cooking at home. Some of them are driven by convenience, habit, or value, while others are deterred by price, inflation, or interest rates. McDonald's faces the challenge of balancing its pricing strategy, product quality, and customer loyalty, while also competing with other fast-food chains, grocery stores, and meal delivery services. The future of McDonald's depends on how well it can adapt to the changing needs and preferences of its customers, especially the lower-income ones who have been its core supporters for decades.

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