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The rising prices of food in the United States have caused concern for low-income consumers who are struggling to afford eating out at fast-food chains and restaurants. According to polling conducted by Revenue Management Solutions, roughly a quarter of low-income consumers are eating less fast food, and about half are making fewer trips to fast-casual and full-service dining establishments due to increasing prices. By January 2024, food prices had risen by 20%, the fastest jump on record, making it difficult for those earning less than $50,000 a year to afford meals.

One example of a consumer impacted by rising prices is Lauren Oxford, a part-time musician from Tennessee, who used to enjoy McDonald’s but has had to cut back on her purchases as prices have increased over the past year. Anecdotal reports from the Federal Reserve’s Beige Book show that low-income consumers across the country are changing their spending habits, seeking bargains, and finding it challenging to access credit. With a significant portion of Black and white American households earning less than $35,000 a year, the impact of rising food prices on low-income consumers is significant.

Fast-food companies have historically targeted low-income consumers by offering affordable options, but they are now faced with the challenge of retaining these customers as prices rise and budgets stretch. While fast-food chains have typically introduced value deals to attract budget-conscious customers, they are now being more selective with discounts and promotions, often limiting them to specific demographics or meal times. Chains like McDonald’s and Wendy’s are leveraging app-driven discounts and loyalty programs to appeal to low-income consumers and gather demographic data for marketing purposes.

Major fast-food companies like McDonald’s are adapting their strategies to cater to low-income consumers by relying on existing value menus and offering discounts through their mobile apps. Wendy’s has introduced a limited-time $1 burger available exclusively through their app to attract customers. Loyalty apps have become a go-to strategy for fast-food brands to increase retention and customer spend, with discounts and rewards aimed at lower-income consumers. By capturing more transaction data through loyalty programs, chains gain valuable insights into consumer behavior.

While some chains are seeing weakness among low-income customers, others, like Taco Bell, are experiencing success in low-income markets. For example, Taco Bell’s $1.40 taco offering at many stores in San Antonio has resonated with low-income consumers. Despite the challenges of rising prices, consumers like Andreas Garay, a retail worker in San Antonio, still plan to indulge in their favorite fast food. Fast-food companies are adapting to the changing landscape by offering targeted discounts and loyalty programs to appeal to low-income consumers while maintaining profits in an increasingly competitive market.

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