Rising prices at fast food restaurants and other restaurants are reportedly causing low-income customers to refrain from eating out.
About a quarter of low-income consumers (those with annual incomes of $50,000 or less) say they eat less fast food, and about half say they go to fast-casual and full-service restaurants less often. , Reuters report Wednesday (March 27), citing data from a consulting firm. revenue management solution.
The cuts come amid soaring food prices, which rose 20% between January 2021 and January this year, the fastest rise on record, according to Reuters.
The report also found that half of those with annual incomes of less than $35,000 have difficulty paying daily living expenses in the most recent Census Household Survey, and nearly 80% have difficulty paying their daily living expenses due to recent price increases. It also points out that this indicates that they are feeling extremely stressed.
And as we noted here earlier this month, low-income consumers face different pressures. Buying a home has become increasingly difficult, and “the cost of food and other necessities continues to strain paychecks and pandemic-era savings.”
Additionally, PYMNTS Intelligence shows that unexpected expenses hinder financial progress for many consumers, especially marginalized consumers who find it difficult to access traditional credit products. I discovered.
Additional research by PYMNTS found that consumers are reconsidering non-essential spending as grocery store prices continue to be high.
According to the PYMNTS Intelligence study, “The New Reality Check: The Paycheck-to-Paycheck Report,” 68% of consumers living paycheck-to-paycheck and struggling to pay their bills list “essential items.” Respondents say they are making trade-offs between “necessities.” They think it’s a “nice to have”.
“Things are not much better for paycheck-to-paycheck consumers who claim they can comfortably control their spending,” PYMNTS wrote earlier this month. “Sixty-one percent of the latter group also say ‘no’ to nice-to-have items in favor of necessities.”
Faced with these issues, industry analysts told Reuters that fast food chains are targeting discounts to specific demographics or limiting them to certain times or channels, such as in-app purchases or delivery. Told.
McDonald’s executives told investors in February that the chain would use its “value menu” to appeal to lower-income consumers who want to choose packaged food at home.
“The battleground is certainly low-income,” McDonald’s CEO Chris Kempczinski told investors. In this case, that means customers with incomes of less than $45,000.
