McDonald's is losing its low-income customers. Economists call it a symptom of the stark wealth divide
View original at finance.yahoo.comMcDonald's is losing its low-income customers. Economists call it a symptom of the stark wealth divide The iconic McDonald's restaurant that opened in the 1950s at the intersection of Lakewood Boulevard and Florence Avenue in Downey…
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Wages are stagnating more for lower-income households compared to higher- and middle-income households.
80% confidenceHouseholds earning less than $45,000 annually have seen huge year-over-year increases in credit delinquency rates, while high- and middle-income household delinquency rates have flattened and stabilized.
80% confidenceTwenty-seven percent of renters are severely burdened, spending more than 50% of their income on housing.
80% confidenceHappy Meals at McDonald's are prohibitively expensive for some people due to inflation.
80% confidenceMcDonald's losing low-income customers reflects broader economic and policy headwinds that disproportionately affect lower-income households.
80% confidenceThe minimum wage boost has forced businesses to trim employee hours, institute hiring freezes, or lay people off.
80% confidenceTraffic from low-income households has dropped by double digits, while traffic from higher-earners increased by nearly as much.
80% confidenceAn analysis of 2,000 restaurants found the $20 California minimum wage did not reduce fast-food employment and led to minimal menu price increases of about 8 cents on a $4 burger.
80% confidenceIn 2023, renters with annual household incomes under $30,000 had a median of just $250 per month in residual income, a figure that has fallen 55% since 2001 with the steepest declines since the pandemic.
80% confidenceLow-income households were the first to see dramatically increased delinquency rates after COVID-19 stimulus programs ended and have not seen a dip in delinquencies since 2022.
80% confidenceMany businesses are unwilling to pass along higher costs to consumers, who have very little tolerance for further price increases after years of higher prices.
80% confidenceFrom 2019 to 2024, the average cost of a McDonald's menu item rose 40%. Worker salary spending grew around 40% since 2019; food, paper, and other goods costs were up 35%.
80% confidenceThe shrinking traffic of low-income consumers is emblematic of a larger trend of Americans diverging in spending, with wealthier customers flexing purchasing power and lower-income shoppers pulling back.
80% confidenceConsumer companies across food, automotive, and airline industries are concerned about pressures on low-income Americans.
80% confidenceMcDonald's supply chain strength means its beef costs are up less than most competitors.
80% confidenceHalf of all renters — 22.6 million people — were cost-burdened in 2023, spending more than 30% of income on housing and utilities, up 3.2 percentage points since 2019 and 9 percentage points since 2001.
80% confidenceAlthough inflation has come down from its 2022 peak, people are still struggling with relatively higher prices and astronomical rent increases.
80% confidencePrices at limited-service restaurants are up 3.2% year over year, at a rate higher than inflation, and that's climbing.
80% confidenceTariff-driven price increases disproportionately affect lower-income households because they spend a greater portion of income on goods rather than services.
80% confidenceThe Dollar Menu appeals to lower-income, ethnic consumers — people who don't always have $6 in their pocket.
80% confidence