Price elasticity in action. Rising prices —> lower volume. It’s the job of marketing managers to adjust the mix of product and price to maximize profit.
Wendy
The Money Supply is pretty much flat. That creates deflation in a manufacturing society because factory costs run towards zero.
Exactly. This board may be focused on macroeconomics, but we can’t forget that the macro picture is made up of individual micro economic decisions made daily by both businesses and consumers.
—Peter
Don’t know what the McDonald’s executive are paid, but for considerably less I am willing to tell them that if they push prices up 100% in ten years while inflation has gone up only 31%, they’re probably not going to be able to do that for much longer.
Unlike Target which owns its stores, McDonald’s is almost entirely owned by franchisees. They set their own pricing.
“Franchisees set menu prices, based on help from a consultant and based on local market conditions.”
McDonald's will start selling a $5 value meal next month.
DB2
Regardless of who owns what, the price-setters have no choice but to face the reality of what the consumer can afford. One by one, they are coming to grips with the fact that pandemic/supply chain driven price increases have gone too far
If you start in 2021 Starbucks is pushing it. People are sick of it. Remember the laws of small numbers percentage changes are higher.
This means the chickens are coming home to roost. At this point or in the next couple of months as factory costs come down, even MCD machine-made burgers, the competitive landscape is going to crush prices.
Get wound up about inflation and think that is written in stone but the messaging will change considerably between now and August…leading into November.
Nothing (except volatile raw materials) sinks that fast. The owners hold on to every penny of price increase they can until the final moments; don’t expect significant price decreases - at least enough to move the political needle by November.
(Gas prices may come and go, but that’s normal with the ebb and flow of travel, and it’s the prices in the supermarket that are going to be determinative, and those move far more slowly.)
Yes, but the Constitution gives broad authority for the Executive branch to curb any and all inflation 
Pete
Is this really true? From my vantage point as a consumer, it appears that supermarket prices move very rapidly. In fact, every week prices change on tons of their items. Heck, they print a new circular every week!
I think the more correct way to view it is that commodity prices move rapidly. That includes gasoline, but it also includes milk and eggs and meats at your supermarket. And to a large extent, it also includes fast moving packaged items like beverages, cereals, yogurts, and similar.
Speaking of gas prices, did you see the news that the administration announced that a couple large government storage farms of gasoline will be drained and closed over the next few months? Lots of extra gas being dumped on the market. Glad I sold my oils when I did.
Inflation is like real estate, location, location, location. Or with inflation, specific to your situation. Don’t know all the inputs for fast food (or McDonalds specifically) but it could be absent the few things that go into “overall inflation” that makes it lower than what it does to produce a burger and fries.
The circulars are printed because the suppliers pay for them (vendor support) to move product to goose sales and even out supply chain surges. The grocery stores don’t really have anything to do with it other than coordinating the information and putting their name on the circular. (Generally speaking these vendor programs can actually be a profit center for the merchant.)
But I was thinking in terms of the overall grocery experience rather than individual prices. While those jay move up or down a few cents (occasionally, like eggs, they double overnight, which really gets the attention). Mr. & Mrs American really notice when their total tab goes from $150 to $200 or whatever.
I was thinking about that, and I suppose it could be true. But then why would McDonald’s have twice the price boosts that Wendy’s or Burger King does? If anything McDonald’s size should make it even more efficient at sourcing materials, delivering, advertising, etc. yet we find that they had the highest rate of price increase, not the lowest.
One PRIME point omitted: Adding more profit. So that would correspond with the omitted PRIME point.
Since 2019 the CPI is up 23%.
The average price of a Big Mac in the U.S. was $4.39 in 2019. Despite a global pandemic and historic rises in supply chain costs, wages and other inflationary pressures in the years that followed, the average cost is now $5.29. That’s an increase of 21% (not 100%).
DB2
The thing about that screed from Mickey D’s corporate, “quality” could mean anything. Good “quality”. Mediocre “quality”. Not qualified for dog food “quality”.
Steve
I think the quality of MCD burgers has gone down, but the point of the post was that price increases have been in-line with overall inflation contra the graph posted upthread.
DB2