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McDonald’s to cut prices as fast food consumption falls to all-time lows

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#1 ·
McDonald’s to cut prices as fast food consumption falls to all-time lows
Saturday, February 25, 2017
by Vicki Batts



McDonald’s is feeling the burn as fewer people choose to dine out, and more people choose to cook at home. The novelty of their all-day breakfast appears to have worn off, as sales and growth have begun to dwindle once again. Now, the fast food giant has turned to something new to help reel customers back in: cutting the prices of drinks.

After last year’s focus on burgers and chicken sandwiches, McDonald’s plans to advertise $1 sodas and $2 McCafe specialty drinks in the hopes of regaining their following across the United States. Bloomberg reports,”McDonald’s leads a $228 billion U.S. fast-food industry that faces slackening growth. After increasing 2.4 percent last year, revenue gains will slow to 1.5 percent this year and 1.6 percent in 2018, data from researcher IBISWorld show.”

Restaurant industry takes a hit while Americans dine at home

The gap between restaurant prices and grocery costs is at an all-time high right now, which has been prompting many people to choose to eat at home, rather than going out. McDonald’s is not the only restaurant in the industry being hit hard by this change. Reports indicate that almost a third of US adults say that they are eating out less frequently than they did just three months ago, mostly due to the sheer cost.

Traffic to restaurants has been dismal since 2009, remaining flat or up by just one percent in recent years. A poll by Reuters/Ipsos revealed that 62 percent of respondents said cost was the primary reason for choosing not to go out to eat. And it’s no surprise: estimates suggest that the consumer price index for food away from home was up by 2.4 percent. Conversely, the cost of eating at home has dropped by about 1.9 percent. And apparently, people are noticing the disparity.

Reports also indicate that people in their 20s and 30s are more likely to dine at “fast-casual” restaurants such as Chipotle or Panera Bread. Julie Jargon, of The Wall Street Journal, wrote, “Increasingly, younger diners are seeking out fresher, healthier food and chains that offer customizable menu options for little more than the price of a combo meal.” Millenials have become the biggest threat to chains like McDonald’s; they’re looking for healthier options, and the price difference isn’t all that much.

Even back in 2014, McDonald’s efforts to engage the 20-to-30 age group fell flat.



Healthy eating trend continues to grow

Retail expert Robin Lewis explains that McDonald’s isn’t the only brand to be affected by strong disinterest from younger age groups. Lewis says that young people are tired of the constant marketing and advertisements that are thrown at them by iconic brands — and are more interested in smaller, more simple marketplaces.

To put it simply, McDonald’s is going to have to work very hard to convince young people their food is healthy if they want to recoup their sales. The fast food giant has already advertised removing antibiotics from their chicken, but it doesn’t seem to be convincing enough. The trend of healthy eating has gotten a strong following, especially among young people, and it only continues to gather steam.

A 2015 survey of more than 30,000 people revealed that younger people are becoming more concerned about the ingredients in their food, genetically modified foods, and organics than previous generations. More than 40 percent of the under-20 age group, and 32 percent of people in their 20s and 30s, reported that they would be willing to spend more money on healthier food options. Conversely, just 21 percent of baby boomers would be willing to pay more for higher quality food.

The amount of soda being consumed in the United States has also been on a steady decline for the last few years. In March 2016, Business Insider reported that soda consumption had dropped by 1.2 percent in the preceding year. And in 2014, sales had already dropped by 0.9 percent. In total, American soda consumption dropped by 1.5 billion cases in 2015, when compared to the peak volume of 2004. This is great news, especially given the harmful effects of sugar and high-fructose corn syrup.

While the trend of healthy eating isn’t great for the fast food and beverage industries, it is good for people.

Sources:

Bloomberg.com


CNBC.com


BusinessInsider.com


HuffingtonPost.com


BusinessInsider.com
 
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#4 · (Edited)
Brand perception for McDonald's has never been worse and reduced price won't get me to eat more and more often. Price is not what's wrong with McDonald's. It's the fact that they make shitty micro'd burgers served by some of the rudest and trashiest people in existence. You're giving up good customer service for "fast" service. At least in my town anyways. There's much better options now and I'd rather make it about a better experience than the food itself.

When it comes to burgers, I prefer getting mine from a local diner or just grilling my own.

Who wants to eat this shit anyways?







Reducing prices won't make up for the shit they serve.
 
#7 ·
Price drops won't help and why does it seem like 90% of their ADs seem to target black people?

This is why we need more farms in America, people will eat healthy if you offer ways to get it cheaper!
more farms opposed to cheap, shit meat like they produce would make it cost more, not less.


America produces a shit ton of fruit that's much, much worse than what we have in Canada because the standards are worse and they're going for quantity over quality.
 
#8 ·
Things just do not add up. They tried healthier options in the past and they did not do good. Yet they are losing sales because people want healthier options.

I think one of the real problems is they built too many McDonalds close to each other who end up splitting business. That and they have grown about as big as they can yet they want to keep seeing sales growth. You can only get so much.

Personally I just wish they keep the Grand Mac but lower the price a bit and I would be a happy camper.
 
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#10 · (Edited)
It kinda sucks to hear that the majority of people around my age group prefer fast casual stuff. There's so much better you could do than Chipotle, Panera Bread, or the like, and it's not like that stuff is bad.

But there's something really genuine and warm about going out to eat in a nice local restaurant, soaking in the ambiance and eating a nice, well prepared meal from somebody who really does care about what they're making you. And considering more people would favor spending money on real, healthy food, it makes me wonder why they prefer fast casual in the first place, where using those kind of ingredients is probably less likely.
 
#14 ·
It kinda sucks to hear that the majority of people around my age group prefer fast casual stuff. There's so much better you could do than Chipotle, Panera Bread, or the like, and it's not like that stuff is bad.

But there's something really genuine and warm about going out to eat in a nice local restaurant, soaking in the ambiance and eating a nice, well prepared meal from somebody who really does care about what their making you. And considering more people would favor spending money on real, healthy food, it makes me wonder why they prefer fast casual in the first place, where using those kind of ingredients is probably less likely.
Considering this story, I was under the impression this generation is more fitness-centric than the last?
 
#12 ·
Good. People are finally waking up to see how shit and fraudulent McDonalds (and the like) are. Reducing the price of drinks means shit to me because I don't even drink soda anymore.
 
#13 ·
Makes sense. I went to McDonald's mid last year, and the price of a large combo meal, a burger, large fry, and large soda cost around $15-$16 bucks. Before that, I hadn't been to a McDonalds in ages. After that, I never went again. Way too expensive. I know part of of the insane price could be due to location, living in Northern New Jersey, just on the other side of the Hudson River from Manhattan, but still. Fuck that noise. Never again. Been eating healthier this year, anyway.
 
#19 ·
IMO it's not fast food consumption that's at an all time low, just shit food consumption. Like, if you time your wait at, say, Chipotle vs a McDonalds (who by the way own the former,) you probably won't get much difference at all. And in exchange you get something that actually resembles real food.
 
#20 ·
As long as my local Mickey D's keeps slipping that extra cheeseburger into my bag, I have no qualms.
 
#34 ·
McDonald's is not meant to be somewhere you eat every single day. I won't lie, I go to McDonalds once or twice a month with the family when we just want to go out. I am a mark for their chicken sandwiches. Going once in a while is fine.

That being said...McDonald's is missing what the real issue is IMO. Here we have a local fast-food place called B-bops. It has a very simple menu...burgers, chicken sandwiches, pork tenderloin sandwiches, and fries. Is it healthy? Absolutely not, it's not meant to be the picture of perfect health. However, it is delicious and I'll take B-bops over McDonald's any day because of how good the food is. With a simpler menu, you only have a few things to make and do them well. A larger menu to me screams of mediocrity. Food is clearly better at places like Burger King, Wendy's, Taco Bell, etc.

Over the last couple of years or so, McD's has cut down a little on its menu...it needs to cut it down even more. Stop being all things to all people, it doesn't work. It needs to accept the fact that it's not meant to be a healthy choice and that's OK. I don't go to McDonald's for parfaits or a salad, get those off the menu for starters. Go back to a simpler menu of burgers, fries, chicken nuggets, chicken sandwiches, and Filet-O-Fish. Then, you can focus on doing those things better and with the quality of the food you will bring people back.

There is still a place in this world for McDonald's, it just needs to cut back its menu and then improve the quality of what they do have. Simpler menu means better quality food, not to mention stop with this nonsense that it has to be healthy.
 
#35 · (Edited)
McDonald's is not meant to be somewhere you eat every single day. I won't lie, I go to McDonalds once or twice a month with the family when we just want to go out. I am a mark for their chicken sandwiches. Going once in a while is fine.





Over the last couple of years or so, McD's has cut down a little on its menu...it needs to cut it down even more. Stop being all things to all people, it doesn't work. It needs to accept the fact that it's not meant to be a healthy choice and that's OK. I don't go to McDonald's for parfaits or a salad, get those off the menu for starters. Go back to a simpler menu of burgers, fries, chicken nuggets, chicken sandwiches, and Filet-O-Fish. Then, you can focus on doing those things better and with the quality of the food you will bring people back.
Good point. They're also trying to be Starbucks with those mccafe bars in some restaurants. I tried their coffees several times and I honestly couldn't tell you if mccafe's coffee is better than burger kings, starbucks or wendys.
 
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