new York
CNN
—
Value is the new buzzword at fast food chains across the country.
When rising prices deterred customers, restaurants recently responded by introducing cheaper menus.
McDonald’s, for example, offers a $5 meal that includes a McDouble cheeseburger or McChicken sandwich, along with small French fries, 4 chicken nuggets, and a small soft drink.
At Taco Bell, you can now get two different types of tacos, a five-layer burrito, chips with nacho cheese sauces, and a medium drink for $7. That’s 55% cheaper than ordering the items separately.
Like McDonald’s, Burger King offers a $5 meal package where customers can choose one of three types of burgers along with chicken nuggets and a drink.
But what is the real value of these “value” meals?
Well, actually not as much as you might think, since the prices of many key ingredients in value meals go down. In other words, you pay the going rate (or more).
Cheese, potatoes and tomatoes are getting cheaper
Many of the recently announced inexpensive meals contain cheese, potatoes and tomatoes. Compared to last June, cheese prices are down 2.1 percent, tomato prices are down 1.1 percent and potato prices are down 3.9 percent, according to the Bureau of Labor Statistics’ latest consumer price index released Thursday.
On a monthly basis, cheese prices remained unchanged in June. Prices for tomatoes and potatoes fell by 0.3% and 3.3% respectively, seasonally adjusted.
If you eat meat, you’re more likely to benefit from some inexpensive menu items. That’s because meat prices rose 3.5% year-over-year. However, from May to June, meat prices fell 0.3%.
Beef prices were among the most expensive of all meat categories included in the consumer price index. For example, roast beef prices rose by 10% and minced meat by 4.5% compared to last June.
Pork prices also rose by 3.8 percent compared to last year. However, prices are slightly lower than in the previous month. Chicken meat prices rose more moderately over the course of the year, increasing by only 0.5 percent. On a monthly basis, they fell by 0.2 percent in June.
With meat prices rising faster than most other foods, it’s no wonder that most fast-food chains offer their discount menus for a limited time only, leaving them free to raise their prices in the future.
However, Joe Erlinger, president of McDonald’s USA, said that the Value Meals are not a lure for the company for now and that “we are completely satisfied with the profitability.”
“This allows us to offer real value and affordable pricing to our customers at a time when consumers are really under pressure,” he said at a Wall Street Journal conference last month.
Eating out remains a luxury for many
Another aspect: Eating out is much more expensive than cooking at home.
This should not be surprising, since eating out involves many more costs – one of the biggest being labor costs – that are not incurred at home.
But you’re likely to experience a bigger price shock when eating out than when shopping at the grocery store.
Last month, food prices rose overall by 0.2% compared to May. Year-on-year, food prices rose by 2.2%.
Groceries in shops cost 1.1% more than a year ago, and these prices have increased by 0.1% on a monthly basis. Menu prices in restaurants and cafes have increased by 4.1% year-on-year and by 0.4% from May to June.
