[New York Diary] "Thank You, McDonald's"... $5 Hamburger Set Launched Amid High Inflation in the US

Recently, I visited the American fast-food chain McDonald's. The news of a $5 hamburger set caught my attention. The set menu, consisting of a McDouble hamburger, French fries, and four chicken nuggets, was priced at just $5. It was cheaper than McDonald's signature Big Mac (priced at $5.99). Although the hamburger was small, the portion size of the set was sufficient and it was not bad as a meal. Additionally, McDonald's offered a free fries coupon through their mobile app for purchases over $1. Being able to have lunch for about 7,000 KRW in the heart of expensive New York gave a greater psychological satisfaction.

The American fast-food chain McDonald's recently launched a hamburger set menu consisting of a hamburger, French fries, and four pieces of chicken nuggets for just $5. New York - Photo by Kwon Haeyoung

In the United States, it is virtually impossible to have a meal at a fast-food restaurant for around 10,000 KRW. For example, the well-known East Coast burger chain Five Guys starts their hamburger prices at $11.29. For smaller-sized hamburgers, prices start at $9.09. Ordering fries and a drink pushes the price of a hamburger set well over $20. Even having lunch with a hamburger set costs nearly 30,000 KRW. This is a result of soaring inflation caused by the COVID-19 pandemic and the Ukraine war, which also drove up food prices. According to McDonald's, product prices have increased by up to 40% over the past five years from 2019, just before the pandemic, to 2024. The Big Mac price rose by 21%, and the 10-piece McNuggets set menu increased by 28%.

McDonald's is not the only American fast-food chain recently lowering prices. Burger King and Wendy's have also entered the ultra-low price competition. Burger King introduced a $5 set menu consisting of a sandwich, fries, chicken nuggets, and a drink. Wendy's is selling a breakfast set menu consisting of a sandwich, fries, and eggs for just $3. Inflation has surged, and consumers are cutting back on dining out as excess savings accumulated during the pandemic are depleted. According to the National Restaurant Association (NRA), the number of customers visiting restaurants has declined for 14 consecutive months. There is a trend of increasing home-cooked meals due to the burden of dining out expenses. Consequently, fast-food companies that had raised prices amid rising costs and inflation have now entered a price-cutting competition to expand sales. Earlier, McDonald's CEO Chris Kempczinski stated during an April conference call that "we need to focus on affordable prices," which aligns with this trend.

Although inflation in the U.S. has recently slowed, overall living costs have already risen significantly, so consumers hardly feel the relief. Inflation is also a reason why voters are critical of President Joe Biden’s economic policy, "Bidenomics," as he seeks re-election in November. Due to soaring prices, Americans are reducing not only dining out expenses but also grocery spending. According to an internal analysis by the U.S. Department of Agriculture, household food expenditures decreased by an average of 3.1% last year compared to the previous year. Market research firm NielsenIQ also reported that the number of items purchased by U.S. consumers at retail stores over the past year was 248 billion, down by 3 billion items compared to the previous year. In response, Target, which operates about 2,000 stores in the U.S., recently lowered prices on 5,000 items including dairy products, meats, bread, fruits, and vegetables, and Walmart also announced price reductions on approximately 7,000 products.

McDonald's $5 hamburger set experiment is part of this broader price-cutting movement. The "happiness for 7,000 KRW" experiment by McDonald's will continue for one month. However, with Americans’ thinning wallets and signs of slowing consumption, companies have already begun to consider price cuts to attract customers. The decision by fast-food giant McDonald's is drawing attention as it may trigger an ultra-low price competition across the industry.