Why Is McDonald’s So Expensive? (Top 10 Reasons)

 

McDonald’s is one of the most popular fast-food chains not only in the United States but also in the world.

It has risen to popularity thanks to such menu items as the Big Mac, the Egg McMuffin, and the McRib.

While many people have grown accustomed to the “value” menu, it has become more expensive to eat at McDonald’s.

Why is McDonald’s so expensive?

There are quite a few reasons that could impact what you pay, regardless of whether you’re eating at the restaurant for breakfast, lunch, dinner, or a midnight snack.

 

Why Is McDonald’s So Expensive?

 

McDonald’s is certainly not the cheap fast-food restaurant that it used to be.

Many people have noticed that a quick stop for a Big Mac value meal is costing them more than ever before.

If you’re buying for an entire family, those meals and Happy Meals can add up quickly.

There are some reasons to explain the expensive prices, which are described here.

 

1. Customer Reliability

 

If you’ve ever driven by a McDonald’s around lunchtime, you know that the place is popular.

They have a reliable customer base that visits them on a regular basis.

Some people cannot go an entire day without swinging through the drive-thru for a cup of coffee.

Others say that the fountain soda at McDonald’s tastes better than at any other restaurant.

Of course, there’s also the reliable menu.

McDonald’s isn’t one to get rid of popular items like other restaurants.

While they’ll add some new items here and there, they are reliable in terms of what they offer: burgers, chicken nuggets, and fries.

People find that McDonald’s is reliable.

They know what to expect.

McDonald’s counts on the reliability of their customers just as customers count on the reliability of the chain restaurant.

They know that people can’t resist passing the Golden Arches on the interstate and the smell of French Fries wafting through the air in their neighborhood.

With customer reliability comes an increase in the pricing.

Why?

McDonald’s knows that people are going to pay for a Big Mac no matter what because they’re the only ones who can offer it.

While it may not be the best burger in town, it offers reliability.

 

2. Supply & Demand

 

There’s an important concept of supply and demand to consider when looking at the cost of McDonald’s.

Whenever there is low supply and high demand, it can increase the price of a product.

Whenever there is high supply and low demand, it can decrease the price of the product.

McDonald’s has been around for decades.

Most people can walk into the restaurant and know exactly what they want to order because the menu has been consistent.

There’s a demand for this.

People want consistent food that they know that they can get quickly.

The average person can go to a McDonald’s and expect their food less than five minutes after they place their order.

There’s a significant demand for this.

As for supply, the chain has always been able to maintain what is needed to supply people with burgers, chicken nuggets, French fries, and more.

However, not all fast-food chains can say the same thing.

Supply at other restaurants has not been as consistent.

Since there’s always plenty of supply at McDonald’s and people are demanding their Big Macs, McDonald’s can raise their prices on a regular basis without having to worry about losing their customer base.

As for how often the prices are being raised, it will depend on the geographic region.

They are susceptible to supply and demand of their products, too.

If they are dealing with supply chain issues, it can raise the cost of goods, and that can lead to a spike in the menu prices as well.

 

3. Premium Packaging

 

McDonald’s has been focused on eco-friendly packaging for a while.

They aren’t going to use the Styrofoam containers that won’t break down in the landfills.

Choosing recycled packaging for their burgers, their sodas, and everything else can lead to a higher expense.

Restaurants of all shapes and sizes have to choose the packaging that they want to be known by.

Some companies opt for the cheapest packaging, which almost always ends up being the worst for the environment.

McDonald’s knows that part of its marketing strategy is to show that they care about the planet.

They’ll pay a bit more for the packaging and pass the cost onto the menu items.

It’s not just the eco-friendly packaging that adds to the costs, though.

If you’ve ever seen a Happy Meal box, you know that it has a unique design.

Those boxes are also printed with various themes every so often.

It keeps kids entertained, and it keeps parents going through the McDonald’s drive-through regularly so that kids can get the newest themed box.

The cost of those Happy Meal boxes is more than you might think.

They have to be custom printed.

Once a particular theme goes away, there’s the cost to buy the newest theme.

This can add up over time, and it adds to the cost.

Of course, as McDonald’s continues to add new menu items, there’s also the need to add more packaging to the stores.

A McFlurry, for example, uses a different cup and lid than a traditional soda.

As more packaging gets added, the costs continue to rise.

 

4. More Premium Ingredients

 

McDonald’s may be a fast-food restaurant, but it also prides itself on using premium ingredients.

It’s one of the reasons it continues to stay in business year after year.

It’s also why so many people will wait in the long lines at lunch and dinner time.

The burgers are made from delicious cuts of beef like chuck, round, and sirloin.

It’s what adds the flavor that they are known for, and it is 100 percent beef.

The chicken McNuggets are made from white meat chicken as opposed to using dark meat and other random fillers.

The desserts are made with real dairy products.

The fries are made with real potatoes.

The list goes on and on about the “real” products that are being used.

Of course, each individual McDonald’s isn’t making their products from scratch.

To ensure that the food tastes the same from coast to coast, everything is manufactured in plants and shipped out on food delivery trucks.

Real ingredients cost more.

For the fast-food chains that have cheaper prices than McDonald’s, take a close look at the ingredients that are being used.

You’ll find that the chicken isn’t always white meat.

A variety of fillers may be used.

Some of the other ingredients are fake so that they taste like milk, cheese, or sausage.

If you want to look at why McDonald’s is expensive, they’re giving you real food.

This is what allows the food to taste better, but you do have to pay for the cost of the better ingredients.

 

5. Higher Hourly Wages

 

Wages have been on the rise throughout many industries.

The minimum wage, in particular, has been rising throughout the fast-food industry.

As the minimum wage rises, the cost of doing business rises.

McDonald’s likes to pay its employees well.

This means that the average hourly employee will be paid slightly above minimum wage.

As a person learns more and shows off their talents, they can work toward higher-paying positions, including shift supervisor and store manager.

When minimum wage used to be $5 an hour, it allowed the burger chain to sell burgers for considerably less.

Now, there’s the need to maintain a profit margin.

As a result, as the minimum wage has gotten to be as high as $15 an hour in some areas, the cost of everything on the menu has to increase as a way to account for the labor costs.

There are three major aspects of a McDonald’s budget: food cost, labor cost, and disposables.

Often, all three of these areas are going up, and it all goes back to labor.

Even though McDonald’s may not be paying labor for the food and the disposables, but the companies that they get their food and disposables from are, and the costs of those goods are more expensive because of rising labor costs, too.

 

6. Employee Benefits

 

Benefits are an important aspect of any business.

It’s what helps to attract employees and keep them in place for the long term.

McDonald’s, like anyone, has to be competitive.

They have to offer more or better benefits than the other fast-food chains so that they don’t have to worry about their employees leaving to work for the competition.

While benefits can vary based on the individual franchises, there are quite a few that are common across the board.

Uniforms are one of the top benefits.

Employees don’t have to purchase their own uniforms, which is a common practice in many companies.

Instead, McDonald’s will cover the cost.

Health insurance is offered to most employees.

This includes not only medical but also dental and vision insurance.

The premiums are kept affordable for the employees, which means that the company picks up most of the cost.

Other insurance that is commonly offered includes life insurance and short-term disability insurance.

Many employees are given access to holidays and paid time off.

This means that the restaurant may end up paying employees even when they’re not working, and this can add up to more money on the payroll.

Almost all employees will also get free lunch on their lunch breaks when they’re working.

Some will also get discounted meals when they’re not working for the day.

Additional benefits may be offered to employees who have been with the company for a while or who are in management.

This can include such things as 401(k), a stock purchase plan, training courses, and a tuition matching program.

 

7. Research & Development

 

Have you ever noticed that McDonald’s adds various items from time to time?

They may add a completely new menu item, or they’ll change up some of the available flavor profiles of an existing menu item.

All of this requires money spent on research and development.

McDonald’s maintains a test kitchen in Oak Brook, Illinois.

This culinary center allows people to research some of the latest food trends.

Then, as ideas are created, they go into the kitchen to see what ingredients and equipment are needed to make it happen.

Once a product has been created, it is tested.

If there are enough people who like it and who say they would order it, it’s added to the menu.

Some of the latest foods to come out of the test kitchen include the Spicy Crispy Chicken Sandwich as well as the full line of McCafé bakery items.

While people love to have the same McDonald’s food that they grew up with, the chain also knows that they need to continue to add some new and exciting menu items.

It will keep some people coming back.

It also allows them to compete with some of the other fast-food chains.

The cost of maintaining a culinary center is significant.

Therefore, while the new menu items are exciting to see, you have to remember that you’re paying for those new menu items whether you order them or not.

 

8. The Dollar Menu Is Being Phased Out

 

The Dollar Menu may have been one of the favorite aspects of McDonald’s.

It was a guaranteed way to save money when eating out.

The restaurant would offer a handful of items at only $1.

This includes the basic cheeseburger, small fries, and a small drink.

The Dollar Menu is being phased out.

One of the reasons for that is that the cost of all of the other menu items had to go up in order to compensate for offering so many low-cost items.

As the cost of goods rose, they had to keep their profit margin somehow.

That meant that some people were paying more for a Big Mac just so other people could keep getting their cheeseburger for $1.

Now, you might notice that there is a $1/$2/$3 menu.

The company cannot support so many items being sold at $1.

However, in order to still show that there is value on the menu, they have added items at $2 and $3.

While it’s not quite as cheap, they’re one of the few fast-food chains offering this kind of deep discount on food.

The good news is that you can get a pretty good meal for less than $5.

 

9. New Technology

 

McDonald’s prides itself on being able to get food to people as quickly as possible.

This is dependent on efficient order taking as well as fast cooking techniques.

If either of these aspects becomes an issue, it can slow down the time it takes to fulfill an order.

Technology is consistently added to locations to help.

If you’ve ever taken a peek into the “behind the scenes” area, you’ll see that there are monitors with the different orders.

It keeps a timer going to see how long it takes for the food to go out to the customer.

It also allows the employees to see which order is up next.

There are also various forms of technology in cooking appliances.

Fryers, for example, have timers on them.

If they’re responsible for cooking fries, the baskets will come up out of the oil after a set amount of time.

The same goes for chicken McNuggets and other fried food.

In some instances, McDonald’s will even have technology at the drive-thru.

The screen will show customers what they have ordered.

It’s a final check to ensure the order is correct.

Without the screen, an order could be incorrect, and it wouldn’t be fixed until a customer got to the window.

To improve efficiency, many McDonald’s locations have been adding self-serve kiosks in the dining areas.

It allows people to walk up and place their orders on the touchscreen.

They can pay for the order and receive a receipt.

Then, they just wait for their order number to be called.

It can improve order accuracy, and a customer won’t have any interaction with an employee until the food is up.

The modern technology that adds to the customer service and speed of service comes at a cost.

This kind of technology can take years to pay off.

As the technology is introduced to the various chains, it adds to the overall cost of the menu items.

 

10. Advertising

 

You don’t know about McDonald’s solely because you’ve driven past the golden arches.

The chain has an extensive advertising campaign on TV, radio, and in newspapers.

In some instances, they’ll even pay for billboards on major highways.

They might even sponsor various sports games.

There have been quite a few popular jingles over the years, too.

“I’m Lovin’ It” has been a popular jingle, and it’s been sung by a number of celebrities.

Commercials have been seen for years, and many of them feature relevant celebrities of the time.

There’s a significant cost for advertising.

Marketing firms are paid to come up with the jingles and the advertising concepts.

Then, there’s the cost of making them come alive.

Celebrities have to be paid, film crews have to be acquired, and posters have to be printed.

It’s all at a cost.

It can be entertaining to see how advertising has evolved over the years, but the cost has been there since the beginning.

It’s why the love of McDonald’s is multi-generational.

Through advertising, everyone learns about the menu at McDonald’s and why they need to be eating at the chain.

 

How To Save Money At McDonald’s

 

Saving money at McDonald’s can ensure you save a bit of money on your various fast-food outings.

The dollar menu has been phased out almost entirely, so you can say goodbye to any chance of spending only a dollar (plus tax) at the drive-thru.

Value meals can save you a bit of money if you want a full meal of entrée, fries, and a soft drink.

It can end up saving you at least a dollar in comparison to buying everything à la carte.

Some menu items are cheaper when you buy them in bulk, as well.

For example, if you and everyone else in your car want to eat McNuggets, go ahead and get a box of 20.

That way, you can save money.

If you were to buy several of the smaller boxes, it would cost you more.

Every now and then, you can find coupons, too.

These are found in various places:

• Sunday newspaper
• School coupon books
• Citywide coupon books

The coupons are often a “buy one get one” kind of deal.

While you might not get a blanket discount of 10 or 20% off your bill, you will save if you’re planning to buy food from McDonald’s for more than one person at a time.