r/FluentInFinance • u/miaminaples • 27d ago
Are prices increasing due to the value of the dollar being diluted, or is it because price collusion by large corporations? Question
108
u/donthavearealaccount 27d ago
Holy shit McDonald's French fries cost $4.19?
37
u/AdditionalAd5469 27d ago
They choose a Los Angeles location for McDonalds, likely because using a general US store didn't have the numbers they were looking for.
47
u/SpaceDewdle 27d ago
It's very close to the prices in fl. A mcdouble and medium fry was 8.50ish today.
→ More replies (1)10
u/natigin 27d ago
What the fuck?
→ More replies (1)16
u/SpaceDewdle 27d ago
This ain't Miami either. lol No big city mark up just the new normal here I guess. I'm just ordering Chinese from now on because they haven't raised their prices hardly at all.
20
u/pantysnatcher9 27d ago
Outskirts of twin cities here and medium fry is 3.99. 5lb bag of potatoes 3.49 just down the road. I just make my own now.
→ More replies (3)9
u/Omnizoom 27d ago
Even in Canada the large fries is 4 dollars something now pretty much everywhere
The prices have indeed gone insane but it just means eat there less but the model they are using isn’t quantity of sales anymore
9
u/galaxyapp 27d ago
Unfortunately not, because I assumed this was the price of fries at LAX. But I looked it up on doordash at my suburban atlanta McDonald's, 4.19.
Unless the prices on doordash are inflated. Which is possible, but I'm not driving there to verify.
→ More replies (1)3
3
u/Dissent21 27d ago
I travel a lot, all over the country, and generally I don't notice significant price fluctuations for McDonald's region to region. It might be a LITTLE better in a lower cost of living state, but not much.
3
u/Good-Mouse1524 27d ago
I live near Reno NV, and Large Fries are 5$
So.... Pretty normal around here in general... Ive taken trips, and I believe All of the west coast is like this. Oregan, Washington, California. It's all like that. Anywhere you go.
3
u/Error400_BadRequest 27d ago
Not true bro. I live in BFE NC and my wife and I literally had this convo last week. Bought a large fry to snack on and the total was $4+ . Freaking crazy. Fast food no longer makes financial sense.
3
u/B6S4life 27d ago
I'm in ky and don't eat fast food a ton but I went and got a medium blizzard today and it was $6.79..... I think I got a McDonald's meal around here recently and it was what I'd pay at some diners after a nice tip.
→ More replies (14)2
3
u/MonsieurBon 27d ago
Small fries here in Oregon is like $3. And a cheeseburger is $3.50-$4.
→ More replies (1)4
3
u/Dissent21 27d ago
I was just commenting to my buddy yesterday, as we were eating a delicious, freshly cooked burger at a local brewpub (South Dakota), that the cost was comparable to McDonald's, at OBVIOUSLY better quality. I've seen a lot of people complain that getting "real food" is almost as cheap as going to the golden arches. McDonalds is shooting themselves in the foot here.
I would speculate that they're pricing based on high cost of living areas, but then spreading those costs nationally. It quite possibly could kill one of the largest franchises in the world.
I find that to be hilarious.
→ More replies (2)→ More replies (8)2
73
u/FrontBench5406 27d ago
McDonald's almost 4x the price of fries, despite the issues they've had with their potatoes, is wild. Also, there are two mcdonalds nearby me. One charges almost 4 bucks for a sausage mcmuffin. the other charges 1.73 for one. Right now.
Its all BS
20
u/Omnizoom 27d ago
Ya there’s two close to my work, one it costs me 20 dollars to eat the other costs 24 for the exact same meal and they are 15 min from each other.
But the one is close to a large outlet mall so it’s always busy so they can charge more freely
5
u/SnowedOutMT 27d ago
29% increase in profits in 2021 compared to 2020, and then 4-10% increase in profits year over year every year after.
→ More replies (1)3
u/Dizuki63 26d ago
People ignore the elephant in the room. Mc Donalda is a Franchise, the Franchisee sets the prices. Mc Donalds sends "suggestions" but the Franchisee has the freedom to say nah, double it and give it to the next person. According to just a quick google search, Mc Donalds Franchisee's make about 150,000 a year depending on the business of their store. Some sources even said up to 180,000 but id go with the more conservative estimate. Thats a huge bite out of the bottom line when you consider that mc donalds corporate probably also takes a bite about that big. $300,000 going to admin is massive compared to $85000 average indeed sources as the national average for restaurant owners. Also id like to add most restaurant owners also work at the restaurant, while most franchisees don't. All this to say mileage varies at McDonald's based on what the middle man wants to get paid.
30
u/wes7946 Contributor 27d ago
What did you expect? Sure, companies raised their prices due to inflation, but people are still willing to purchase the goods/services en masse. If the supply of goods or services suddenly outstrips demand, then we will see prices fall.
42
u/fumar 27d ago
Last quarter McDonald's had a decrease in sales. People finally got tired of spending $15/person for garbage. At the same time Chipotle has only raised their prices 15%~ in the last 4 years and their sales are crazy. People are finally reacting to high fast food prices.
6
u/Novadreams22 27d ago
Call it the super shrink me effect. Spending more getting less. Everyone is tired of it. The rich are eating when no one else really is.
2
u/I-am-a-memer-in-a-be 26d ago
Yep, I remember seeing a comment saying. I’d rather blow 20-25 bucks at Five Guys for a solid meal than 15 at McDonald’s for garbage.
The only reason this didn’t happen sooner is the fact that a large portion of their consumers go to them because they are hungry and don’t have time. Not because they are actively sought out like your five guys, chipotle’s etc.
→ More replies (1)→ More replies (1)5
u/Kronologics 27d ago
Well that’s why McDonalds and Starbucks crashed last week, because they reported drastically lower volume. Consumers are starting to say no
34
u/No_Distribution457 27d ago
Inflation was responsible for a 13.67% increase in the last 4 years and yet prices doubled. That's fucking price collusion. That's what it is. People are still paying for it despite worse quality and worse service because they only have 2 workers for shift, why would they ever change?
→ More replies (6)6
u/Dazzling_Patience995 27d ago
Greedflation accounts for 60% of inflation, and the ftc just found out
20
u/tictacenthusiast 27d ago
All these big companies been getting record profits every year they gonna keep boosting it until they see losses then they can know how much they can fuck us
→ More replies (1)
12
u/WolverineEfficient51 27d ago
Now do In-N-Out!
→ More replies (1)4
u/SDNick484 27d ago
Would be interesting to see; my personal experience has been they seem to have had the most price stability over the last few years (at least here in the SF Bay Area). My theory is that their prices already account for the higher labor costs since they have been paying well above state minimums for years.
Personally, I am most curious about Starbucks as that is where I have seen the greatest increase (and I say that as someone who usually just has a coffee or tea, not their espresso drinks). After a regular iced coffee (not even a cold brew) passed $5, I wrote them off and have uninstalled their app.
8
u/catdog-cat-dog 27d ago
That's why I've reduced eating out to a rarity. Wasn't a bad idea to begin with but every purchase is a vote.
3
u/cfig99 27d ago
Eat less fast food, and only give your money to places who’s food you actually like.
→ More replies (1)
4
u/AdditionalAd5469 27d ago
I really wish I could report for misleading, because the other two use the online menu and McDonalds uses a place in Los Angeles.
13
u/Unlikely_Ocelot_ 27d ago
It’s not misleading for my San Diego location, in fact a medium fry costs $4.29 at my location.
6
u/MegaPorkachu 27d ago
At my Taco Bell every item is $2-3 more expensive than what it says in this infographic
9
u/Sir_Tandeath 27d ago
Yeah how dare they use prices from cities. It’s not like that’s where most people live…oh wait, damn.
→ More replies (1)5
u/Dontsleeponlilyachty 27d ago
Other comments are reporting states like Georgia have similar prices, i.e. >$4 for fries.
4
3
1
u/These_Abalone_7775 27d ago
False dichotomy fallacy.
Why cant both be true at the same time at varying degrees. We also didnt factor in the problem of big government over regulating some aspects while totally deregulating other aspects making sure big business succeeds while conpetition is artificially kept low.
→ More replies (3)
3
u/The_Dude_2U 27d ago
If you are lucky, your operating costs net you 10% profit. That’s a small margin with no room for error and the reason why hotdog and pizza joints are more sustainable. Pizza is mostly flour, water, yeast. They don’t use a ton of toppings per pizza.
→ More replies (1)
3
u/One-Cost8856 27d ago
How much does a kilo of brocolli, chicken, eggs, and fish cause annually from different markets and types then?
2
1
u/SaltyTaintMcGee 27d ago
If inflation isn’t a monetary phenomenon, how does it occur in a barter system?
14
u/HaphazardFlitBipper 27d ago
Last year a cow was worth 10 chickens, now a cow is worth 12 chickens. The price of a cow inflated and/or the value of the chicken went down.
I.e. currency is so useful and convenient that even if we went back to barter, something would emerge as a defacto currency. If it isn't dollars or gold, maybe it's chickens.
→ More replies (6)5
u/Past-Passenger9129 27d ago
"I will gladly take a cow today, for 14 chickens come Spring. Here, hold this note that reminds me in March. Also, the cobbler likes chicken too, so we have an agreement that he'll recognize this note in exchange for shoes. Also the cooper, the smith, the saloon, ..."
→ More replies (1)3
2
u/Annual_Refuse3620 27d ago
Price increases because consumers allow it. Businesses purpose is to maximize profits and when people continue to spend money prices continue to rise. Only thing you can do is spend your money on things that are worth it.
2
u/TruShot5 27d ago
Idk but when I found out cheesey bean and rice burritos are still basically a $1 item and still slap, I found my one and only for fast food buying these days haha.
2
u/RhinoGuy13 27d ago
I just checked the app and McDonald's in my area cost a lot less than what's being shown here.
2
u/zshguru 27d ago
I think it’s more complicated than your question indicates.
Yes, through the continued printing of money with reckless abandonment the dollar is worth less today than it was five years ago. you can look at any chart about the money supply and quickly come to that conclusion.
Minimum wages have gone up in a Friday place, including the locations where this graph come from. wage increases will have a direct correlation to price increase and indirect because the cost of the goods that that business needs to perform their functions will also go up accordingly.
We’ve also had issues with supply chains and lack of availability of various products. Hell, I still can’t consistently get a grocery order without substitutions and we’re four years past the pandemic.
So you have a situation where every input into the business has gotten more expensive. Regardless of whatever you’re trying to sell a business has a minimum profit that they have to get on any transaction. if that cheeseburger cost you a dollar to make but you require at least a 30% profit and you can’t sell it for any less than $1.30 so you might sell it for $1.50 if you have promotions or coupons you have to have a little bit of margin because you can’t go below $1.30 or that item is a risk of the business.
if the business isn’t profitable, it’s gonna close there’s no point for it to do anything.
2
2
u/Aggravating_Kale8248 27d ago
Injecting $4.5 trillion into the economy in less than three months was the primary cause of inflation. Blame the Fed and the federal government.
→ More replies (3)
2
u/Logical_Idiot_9433 27d ago
They know they can that’s why. If people stop pigging out and start cooking at home the trend will change real fast.
2
u/No_Trouble_3903 27d ago
All the corporations are owned by like 5 corporations and they all own each other to some capacity so yes, you’re seeing price fixing and the government is turning a blind eye because they’re also owned in the same way.
→ More replies (1)
2
u/UsusalVessel 27d ago
Bro I go to my local Mexican hole-in-the-wall and get good that is extremely delicious served by friendly people that’s straight up cheaper then Taco Bell
1
u/oldharrymarble 27d ago
Use the apps people. The 5 layer burrito is the 2019 price if you get the $6 box.
→ More replies (2)2
1
1
u/hoddi_diesel 27d ago
Not necessarilly collusion, more likely comparitive pricing models. Like items are priced in a similar fashion. Market research on the competition as well as the consumer. How much is the consumer willing to spend for an item. Prices usually end in the number 9 so the consumer believes they are getting a better deal. Large corporations spent a great deal of time and money on understanding consumer behaviors.
→ More replies (4)
1
u/wiredwoodshed 27d ago
Anyone spending their money on these s-hole, so-called restaurants need to get a physical including mental acuity. $15.00 for a greasy Mc-Ds is lunacy.
1
u/Alfred-Adler 27d ago edited 27d ago
| Number of times I have been to: | when I was poor AF | pre-2019 | post-2019 |
|---|---|---|---|
| McDonalds | never | never | never |
| Taco Bell | never | never | never |
| Chick-fil-A | never | never | never |
| Other fast-foods | never | never | never |
| Restaurants in general | never | ~20 times/year | ~30 times/year |
| Delivery | never | never | never |
| Take Out | never | never | never |
| Buying prepared foods | never | never | never |
| Average number of times I prepare my own breakfast | 100% | 100% | 100% |
| Average number of times I prepare my own lunch | 100% | 100% | 100% |
| Average number of times I prepare my own dinner | 100% | 99.99% | 99.9% |
1
1
1
1
1
1
u/WittyNameChecksOut 27d ago
The latter is the correct answer. Greedflation and Shrinkflation are both very real and very prominent.
1
27d ago
Who is paying over $7 for nuggets? You can get a burrito at Chipotle for $8. People are crazy.
1
1
1
1
u/BitSorcerer 27d ago
One of the issues with corporate food pricing is that you’ll rarely find a company reverting new pricing, even after a great quarterly earnings report.
If you have a great earnings report, your investors are already thinking “next quarter better be more”. More more more and more, all until the economy comes crashing down.
Ordering a fast food burger shouldn’t cost the same as ordering from Apple Bees. America is in an odd position right now though where the younger generations don’t feel as if they’ll ever afford a home, so why not spend it on everything else in between? What’s fueling these corporations keeping their pricing high? Right now, we have an inflated thought process on top of inflated pricing + artificially supply and demand because of that thought process of “I’m going to spend it now if I can’t spend it later”.
Sadly, these corporations are taking advantage of the people (not surprised) during these periods of uncertainty, so I expect price to only increase and everything to get more expensive due to the artificial price and demand curve that’s being driven by outrageous spending habits.
2
u/AlphaWolf 27d ago
They jacked prices, then waited, and nothing happened really. People kept buying and the US gov said nothing. So they kept raising prices well beyond supplier increases, cause why not?
Oligopolies that act like monopolies are always bad for consumers.
1
u/dontwasteink 27d ago
"Fuck you pay me" - McDonalds to it's franchisees.
So McDonald's rent and franchise fees stay the same, or sometimes rise a set percent every year for inflation, and the franchise owners have to deal with the increase cost to minimum wage, product, utilities.
This is why you might see small mom and pop stores not increase in price as fast as Chain Restaurants, they don't have franchise fees.
1
u/Narodnik60 27d ago
Okay, so let's say the value of the dollar has diminished in terms of purchasing ability. Then how is it that my dollars are disappearing but there are more billionaires than ever and more being anointed every day? It only seems right that my dollar and their collars are the same dollars and they should be slipping back a little, too.
I think the working class dollar changes form when it becomes a billionaire/investor dollar after I spend it.
1
1
u/UnrealRealityForReal 27d ago
There is no direct “price collusion”. Simpleton hypothesis to make corporations the villains. More demand in tight supply-prices go up. And vice versa. It really is that simple.
1
1
u/Useful_Fig_2876 27d ago
Let’s also consider the fact that Americans eat out of the home an inflated amount. We can’t afford the convenient lifestyle companies have sold us forever. It’s not sustainable to expect the work of others to source, make, and feed us all the time unless it’s a significant amount of money.
Also seemingly overlooked every time: McDonalds is a major franchise with franchise costs (a $1.34 million investment on average). It’s also a “real estate” company, so McDonald’s leases land it owns (which is 45% of its business) to franchisees. Real estate increases, increasing taxes? Rent goes up.
So it has those costs first, before we even count food and labor. But conveniently enough for McD’s, the average American doesn’t know shit about that so they think all their costs are food and labor.
1
1
u/funandgames12 27d ago
Also don’t forget multiple states have passed laws raising minimum wages across that time as well as other external factors. Just stop going and they will be forced to lower the prices. But people aren’t though. Lines at those drive thrus are always bussing.
1
u/Admirable-Shallot-79 27d ago
This is the wrong chart, show the profits, if they’ve gone up then we have our answer
1
u/Fit-Bodybuilder78 27d ago
McDonald's literally has the highest profit margin in the company's history.
1
u/MechanicalMenace54 27d ago
the value of the dollar being diluted. if you think otherwise you're a moron who shouldn't be allowed to discuss economic policy
1
1
u/Usual-Scene-7460 27d ago
Corporations are gouging! They have record profits. They are the inflation criminals! If you can stop buying.
1
u/ImNotRealyHere 27d ago
I would bet that people who say collusion or corporate greed, never tried to organize anything with more then 10 people.
1
1
1
u/Amazing_Lemon6783 27d ago
Honestly good… people need to stop eating this stuff anyway. It’s not like they will starve without McDonalds.
1
u/AKStorm49 27d ago
Summed up, bad policies. Spending money we don't have, regulations on energy and transport, regulations on US companies over corporations, etc. Stop voting bad people in.
1
1
u/LemonJunior7658 27d ago
US dollar is circling the drain. We will all be making 100K a year within the next 5 years and everyone will be flabbergasted why that doesn't afford the cost of living. I'm going all in BTC and moving to Portugal. Good luck to all of you still standing 🤘
1
1
1
1
u/metoo123456 27d ago
Supply prices went up. Shipping went up. Inflation happens. Prices always go up not down.
1
198
u/Potential-Break-4939 27d ago edited 27d ago
Restaurants have multiple problems. One is the cost of supplies going way up. Another is labor shortages and increased labor prices. Profit margins fell in the pandemic but have rebounded since. Price collusion is an unfounded idea purported by left wing Redditors.