Major fast-food chains are starting to face the consequence for high prices

After some of the most popular fast-food chains quietly hiked their prices last year, slowly cutting away at their affordability, consumers are starting to retreat. Amid high inflation and an overall tight economy, consumers are beginning to hurt the pockets of major fast-food chains as they further tighten their wallets and restrict their spending.

Fast-food brands Taco Bell, KFC and Pizza Hut, which are all operated by Yum Brands, are starting to see consumers pull back. Yum Brands recently reported weak sales growth for all three fast-food chains in its fourth-quarter earnings for 2023.

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Taco Bell’s U.S. same-store sales during the fourth quarter only grew by 3%, which is less than the 8% growth it reported during the previous quarter. For KFC, same-store sales remained even, and for Pizza Hut, same-store sales for the chain decreased by 4% after remaining stagnant during the third quarter.

The news comes after McDonald’s also reported a slowdown in sales growth in the U.S. during its fourth-quarter earnings. The brand’s sales only increased by 4.3% in the U.S. which is a decrease from the 8.1% sales growth it saw during the third-quarter.

The weak sales from fast-food chains come after many have been called out by users on social media for their high prices.

In September last year, a user on Reddit claimed that Taco Bell has hiked its prices in their region where “all of the boxes and most combos were increased by $2.00.”

Pizza Hut also quietly raised some of its prices last year. In October 2023, it introduced a $7 Deal Lover’s menu where consumers can choose two or more items “for just $7 each.” The previous value deal was $5.

McDonald’s was also put on blast by a user on social media in a viral TikTok video where a man in Connecticut highlighted that the price of a Big Mac combo meal was $16.89 at a local McDonald’s store.

"Y'all remember them stimulus checks that they gave out? Y'all thought you were getting away with that stimulus money, they want it back," he said in the video.

During an earnings call last year, McDonald’s Chief Financial Officer Ian Borden admitted that the company has raised its menu prices during the third quarter and estimated that by the end of 2023, prices across the company’s U.S. locations would have increased by 10%.

As consumers are feeling the brunt of inflation, some have turned to making cuts to their spending on prepared food. According to a recent survey by research company Datassential, which was presented in a webinar in December last year, 46% of consumers have cut their spending on restaurant meals and dining out. 

Also, 31% of respondents are opting to cook food at home that they could buy prepared at restaurants in an effort to save money. The survey also found that 75% of respondents cited inflation and the rise of cost of living as their top concern.

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