Why fast food is cheap. Really cheap.

Lizzie O'Leary Mar 4, 2016
HTML EMBED:
COPY
McDonald's earnings report on Monday covers the first quarter with all-day breakfast every day. KAREN BLEIER/AFP/Getty Images

Why fast food is cheap. Really cheap.

Lizzie O'Leary Mar 4, 2016
McDonald's earnings report on Monday covers the first quarter with all-day breakfast every day. KAREN BLEIER/AFP/Getty Images
HTML EMBED:
COPY

Maybe you bought fast food recently, and maybe you noticed it was cheap, like, really cheap. The reasons for that are both macroeconomic, and because consumers are adapting to big changes in the restaurant business.

Venessa Wong, deputy business editor at Buzzfeed, recently wrote about the prevalence of fast food deals and came on the show to discuss why prices are plummeting:

Fast food companies have always targeted lower-income consumers. What’s different now is that these customers are expected to benefit from lower gas prices, falling unemployment, and rising minimum wages, according to research by investment bank Cowen and Company. And as low-income consumers find more money in their wallets, commodity prices are no longer shooting upward as they did in recent years.

As “forecasts for key restaurant commodities including beef, chicken, pork, dairy and wheat are in-line to below long term averages,” restaurants are particularly eager now to take advantage of the lower costs to boost traffic to stores, said Cowen’s report.

Marketplace is on a mission.

We believe Main Street matters as much as Wall Street, economic news is made relevant and real through human stories, and a touch of humor helps enliven topics you might typically find…well, dull.

Through the signature style that only Marketplace can deliver, we’re on a mission to raise the economic intelligence of the country—but we don’t do it alone. We count on listeners and readers like you to keep this public service free and accessible to all. Will you become a partner in our mission today?

Your donation is critical to the future of public service journalism. Support our work today – for as little as $5 – and help us keep making people smarter.