MW The latest inflation woe: Your fast-food breakfast now costs 53% more
By Charles Passy
Prices for the morning meal have surged over the past five years, according to a new study
We've all heard that breakfast is the most important meal of the day. But is it also quickly becoming the most unaffordable?
A newly released study from the personal-finance site FinanceBuzz found that breakfast menu-item prices at 10 of the most popular fast-food chains have increased by 53% since 2019. And in some cases, the spikes are much higher: At Taco Bell $(YUM)$ and CKE Restaurants (Hardee's and Carl's Jr.), prices for morning fare have jumped by 72%.
Other chains have had lower increases, of course. At Subway, the hike over that five-year period is 37% and at Starbucks $(SBUX)$, it's 32%. But even in these instances, the increases still outpace the rate of inflation since 2019, which is 23%, according to the federal Bureau of Labor Statistics.
The FinanceBuzz data looked at popular breakfast offerings, such as egg sandwiches and bagels. Coffee was not included as part of its study.
Perhaps the steepest breakfast increases involved hash browns, a classic morning side dish. The price hike for that item was as high as 149% at Jack in the Box, according to FinanceBuzz, and ranged from 23% to 110% at other establishments. On average, an order of hash browns was 77% more expensive versus five years ago.
Josh Koebert, a data scientist with FinanceBuzz, admitted he's a bit stumped as to what's going on with those morning spuds.
"I'm sure there are some legitimate reasons," he said nevertheless.
To some extent, restaurants are passing along the price increases that they contend with themselves, industry experts note. That's especially true in a five-year period that has indeed seen high inflation at times, which had been a critical issue in the U.S. presidential election.
Plus, prices for some breakfast items, including potatoes and eggs, have been particularly subject to large spikes during this period.
You can't ignore rising labor costs, either. Arlene Spiegel, a New York-based restaurant consultant, said that restaurants rely all the more on their workers during the a.m. hours because customers put quick service at a high priority during the morning rush.
"The operator may require more staff to meet the needs for speed," Spiegel said.
But given that breakfast prices are often way outpacing inflation, experts point to other factors behind the hikes.
Part of it may be that operators know breakfast customers are creatures of habit, said Mark Kalinowski, a veteran analyst who tracks fast-food companies. Meaning these patrons have come to rely on that sausage burrito or bagel with cream cheese as the way to start their day, so they're less likely to object if the cost goes up.
In effect, the operator can take advantage of the fact that it's your morning ritual, Kalinowski said.
Another factor cited by experts may be that breakfast items are fairly inexpensive in the first place. So the price hikes, especially percentage-wise, are going to be all the more glaring.
Rising fast-food prices aren't confined to breakfast, naturally. As has been widely noted, chains have been upping the cost of burgers, fries and the like over the past few years, much to the dismay of longtime customers.
The outcry became so significant that many chains started promoting value offerings in recent months to woo back diners. That was exemplified by the much-ballyhooed McDonald's $(MCD)$ launch of a $5 value meal featuring a McDouble cheeseburger or McChicken sandwich, a four-piece order of Chicken McNuggets, a small order of french fries and a small soft drink.
Also read: McDonald's may still profit off its $5 meal deal, despite reporting disappointing earnings
In any case, the breakfast situation may actually be hitting fast-food customers harder - at least percentage-wise. According to FinanceBuzz, prices at several chains are rising faster for the morning meal than for the rest-of-the-day menu. At Chick-fil-A, for example, breakfast items have increased by 56% since 2019, while lunch/dinner items have increased by 44% - a 12% difference.
McDonald's is a chain where the reverse is true: Its main-day menu items have increased by 80% since 2019, while the breakfast ones have gone up by 54%.
McDonald's and several other chains included in the FinanceBuzz study didn't immediately respond to MarketWatch's request for comment.
But Starbucks did point to a recent comment by its chairman and CEO Brian Niccol that the company plans not to increase menu prices in general in North America during fiscal year 2025. "It's a great start, but we have more work to do to make our pricing architecture straightforward and logical," Niccol said.
Steve Zagor, who teaches courses about the restaurant industry at Columbia University and New York University, warned that fast-food chains may have to be careful about breakfast pricing going forward. After all, diners do have an alternative.
"Some customers are just making those eggs at home," he said.
-Charles Passy
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November 09, 2024 11:12 ET (16:12 GMT)
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