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.
Are
you looking for a new partnership to drive sales? Are you ready for some fresh
ideations? Do your food marketing tactics look more like yesterday than
tomorrow? Visit GrocerantGuru.com for more information
or contact: Steve@FoodserviceSolutions.us Remember success
does leave clues and we just may have the clue you need to propel your
continued success.
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