Food Costs Put The Hurt On Low-Price Restaurants

Pitch Weekly:

In normal times, restaurants serving normal food and charging normal prices hope to keep food costs hovering around 30 percent of their menu prices.

But these aren’t normal times, and fast food chains long ago gave up the 30 percent rule on some items. Although McDonald’s doesn’t reveal its wholesale food costs, it’s safe to say that the McDouble — a double patty burger with one slice of cheese that retails for 99 cents — is being sold for 50 or even 60 percent of costs. The chain was already forced to take the regular double cheeseburger off the dollar menu because it was costing too much.

As ABC News reported last month,

Since 2006, the price of bread has risen 24 percent, beef 4.4 percent, cheese 6.6 percent, and condiments, from ketchup to mustard to pickles, 3 percent. Rising food prices add a dime to the wholesale cost of every cheeseburger.

Now, fast-casual chains such as T.G.I.Friday’s and Applebee’s are also going for broke to keep customers.

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