Walmart revealed one consumer trend that spells bad news for McDonald’s

May 22, 2024

Shoppers are having to stretch their dollars further with the price of everything rising.

That’s why companies are in a battle for their business.

And Walmart revealed one consumer trend that spells bad news for McDonald’s. 

Walmart sees more customers swapping fast food for cooking at home

The price of food jumped by more than 20% since President Joe Biden first took office.

Inflation is changing the habits of consumers as they adjust to high prices.

Fast food used to be a good value proposition to get a cheap meal.

But fast food prices have soared after Biden unleashed the worst inflation in four decades.

Walmart Chief Financial Officer John David Rainey told CNBC that the retailer is seeing more customers switch from fast food to eating at home to cope with high prices.

“It’s roughly 4.3 times more expensive to eat out than it is to eat at home,” Rainey said. “And that’s benefiting our business.”

Walmart’s stock hit an all-time high after the retailer beat Wall Street’s expectations for revenue and quarterly sales.

Same-store sales for Walmart increased by 3.8%.

Rainey added that their customers’ “wallets are still stretched” because of inflation.

While Walmart is thriving, fast food restaurants have been struggling after passing off price increases on customers.

“Foot traffic to limited-service chains, which includes fast-food and fast-casual restaurants, fell 3.5% in the first quarter, according to Revenue Management Solutions. Restaurant executives blamed bad weather in January and February — and a consumer slowdown, particularly among lower-income diners,” CNBC reported.

McDonald’s scrambling to respond to declining sales

A chart from FinanceBuzz found that since 2014, the price of virtually everything on McDonald’s menu has doubled. 

Virginia resident Kevin Roberts explained the dilemma facing McDonald’s customers to CBS News.

“The whole concept was that you were getting some OK-level of food for a low price and you could get it quick,” Roberts said. “Now I can’t justify the expense. If I’m paying $15 for a burger and fry and drink and it’s McDonald’s quality, forget about it — I’m going home.”

McDonald’s, Starbucks, Taco Bell, and many other fast-food chains have watched sales decline after price increases.

McDonald’s CEO Chris Kempczinski admitted that price increases were hurting business during an earnings call with investors last month.

“[A]cross almost all major markets, industry traffic is slowing,” Chris Kempczinski told Wall Street Analysis. “McDonald’s has a long history of being the go-to destination for value, and it’s imperative that we continue to keep affordability at the forefront for our customers.”

The days of the dollar and value menus at fast food restaurants are long gone.

McDonald’s is planning to lure customers back with a limited-time $5 combo meal promotion.

Customers can pick from a McDouble, McChicken, or a four-piece McNuggets along with fries and a drink for $5.

“We know how much it means to our customers when McDonald’s offers meaningful value and communicates it through national advertising. That’s been true since our very beginning and never more important than it is today,” McDonald’s USA told CBS MoneyWatch.

The sad part is, each of those items used to be on the dollar menu, so the same food still costs at least $2 more.

That’s why the high cost of living is causing a change in behavior as consumers search for the best value.

Read All About It will keep you up-to-date on any developments to this ongoing story.

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