Inflation Is Driving Up McDonald's Profits

The cost of everything is dramatically up these days. Although gas prices were down slightly in September compared with the month before, they are still more than $1.50 higher than two years prior, per the U.S. Energy Information Administration. Additionally, housing prices in the U.S. in June 2022 were 17% higher than the year before, says CEIC. But nowhere have people been feeling the more constant pinch of tight finances than in the grocery food aisle or at their local restaurant.

Consumers have undoubtedly noticed by now that prices on menus and in stores have risen by a significant margin in 2022, thanks to historic food inflation. In fact, the consumer price index (CPI) for food-away-from-home (aka restaurants) is up 8.5% year-over-year from September of 2021 to the same month in 2022 — and the last month alone saw a 0.9% uptick, says the USDA's Economic Research Service. Grocery store (aka food-at-home) CPI is flexing even more, with prices a whopping 13% higher over the last year. Although many restaurants and food-away-from-home sites are likely seeing customer downturns because of these rising costs, at least one popular budget chain is enjoying a significant upswing.

Why McDonald's is soaring with one particular group

Sometimes people really don't want to cook, but they don't necessarily feel like paying a fortune to dine out. Many such individuals are seeking out McDonald's, the well-known budget fast food option, to get a treat for a lot less than other places. According to CNN Business, McDonald's is seeing more visitors from less affluent tax brackets, which is no doubt contributing to the company's bottom line. In fact, sales in the third quarter of 2022 alone were up 6.1% — despite the fact that McDonald's actually jacked up its prices by 10%! Apparently, people are willing to pay a little more for less expensive food if it keeps them out of the pricier joints.

McDonald's has also done a bang-up job in 2022 of generating food-related buzz. Company promotions like retro Halloween bucket Happy Meals, Adult Happy Meals, and the forthcoming McRib "farewell tour" have had guests lining up for their favorite nostalgic items. The burger joint's app has also been a massive hit, with 100% more downloads in 2021 than the second-place QSR app, according to QSR Magazine. As of January 2021, the app had more than 24 million downloads to its credit, which was no doubt helped in-app promotions such as "Free Fries Friday." Something tells us that the powers-that-be at McDonald's are definitely lovin' it.