That is less about inflation and more about pricing power. An Egg McMuffin is a low-grade foodstuff in one community (probably higher income), but a "treat" or extravagant breakfast in another (probably low income). The Egg McMuffin has far more pricing power in Detroit than it does on Rodeo Drive.

This happens with things like Medium Ground Beef as well. But T-bone steaks can be quite cheap in lower income areas, and massively overpriced in more expensive parts of town.

Everything I care about definitely seems to have gone up a lot more than the nominal inflation rate would suggest. Maybe not 50%, but... certainly more than 20% over the last two years.

Then again that's been true since I started paying attention to this stuff almost 20 years ago. The reported inflation rate's never felt all that close to how much stuff I buy's actually going up in price (the reported rate's consistently a lot lower than that).

HOWEVER, in the specific case of McDonalds, you have to factor in that they've spent the last few years aggressively optimizing for price discrimination. If you're poor, you use the app and physical coupons and never pay menu prices, but something closer to what the prices used to be. If you're not poor you pay menu prices and wonder when fast food stopped being cheap (it didn't, they just make you trade some time and effort to get "normal" prices now)

Yea, the expert class is under idealogical capture You got fraud in many fields like social science. depression, and Alzheimer's research were the hot fraud of the last couple weeks.

Experts are just spinning things to fit their idealogies. Regular folks must start evaluating how inflation is personally affecting us and make noise.

Is the menu prices on the app less than you'd see at the drive through window?

Not sure. I know they push tons of deals through the apps. I know this second-hand, including from someone who routinely gets entire meals from Taco Bell, specifically, for a couple dollars—just as you used to be able to do off the normal menu. Sometimes he can get absurd amounts of food for less than a dollar—just as you used to be able to do couponing or deal-hunting. In short, what it looks like to me is the normal prices became "sale" prices, the former sale prices became super-duper-sale prices, and the new menu prices are a totally new massive-profit-margin category that didn't exist before.

This is actually pretty similar to what pizza chains have been doing far longer and to a greater degree than other fast-food joints used to—it's long been the case that you can get 30-50% off your chain pizza order with coupons, and that there are always a bunch of coupons available to suit many common orders, such that there's rarely a reason to order anything at full menu price from a major pizza chain unless you just can't be bothered to track down any of the deals (hence, it's price discrimination, with a side of psychological manipulation to make you think the "deals" are actually bargains when they are, rather, simply not rip-offs).

As for my own experience: we usually do Arby's when we want garbage food. We can easily drop $40 there at menu prices without going nuts—or we can get all of the exact same stuff for $15 or less, with coupons (the key: lots of their coupons list, in small print, a count of times you can apply it in the same visit, so you may be able to use a single coupon for, say, "$3 sandwich + fries" to buy five of those meals at once at the coupon price). Again, these places have long had coupons, but they didn't used to constantly have lots of coupons or other deals active at once, and the difference between coupon and menu prices didn't used to be so extreme. Actually, noticing that Arby's prices had damn near doubled over just a couple years (pre-pandemic) was what prompted me to take notice of this situation, which does appear to be playing out industry-wide.

For my closest McD’s it’s still $1 for a large soft drink at least (I know some franchises have the ability to change the cost of a large nowadays), but it is $2.49 for a sausage McMuffin.

The weirdest thing I've discovered is that the app doesn't show you certain discounts (but you still get them) - there's often a BOGO discount on the sausage McMuffin (the only true McMuffin, all you egg McMuffin eaters can gtfo) where the second is a dollar (or sometimes even free!) but nothing tells you this until you add a second one to the order.

The McDonalds app is the weirdest mish-mash of modern app design with ancient CRM systems I've ever seen. It looks like they finally updated the email receipt - it used to be text-based straight from the 80s.

They just brought the 2 for $5 breakfast sandwich deal back. They've had the "buy one sausage muffin/biscuit or hashbrown and get another for a dollar", though.

The BOGO Big Mac deal is what always pulls me in.

I'm big on the fish sandwich and breakfast burrito. I went there the other day to use the free hashbrown coupon. They cancelled it saying they had no hashbrowns in stock. Seems pretty hard to believe that a McDonald's ran out of 5 cent frozen hashbrowns that come in industrial sized bags. I almost readded it paying for it to test the theory.

It will be interesting to see if locations start pulling tricks to avoid honoring the deals in the app.

Soft drinks are a loss leader for fast food, which is why judging McDos on the price of a single item like soda or mcmuffin is a bit oversimplified. Pricing strategy fluctuates (sometimes) independently of supply costs.

Ha ha, no. That's where the money is. They have like 90 percent margins on those syrup/water mixes.

...

I like discussions about inflation though because everyone brings up a particular item from their own budget. For instance, have you priced Little Debbie Zebra Cake Rolls lately? Did you even know they exist? It's like a mixture of a Swiss Roll and a Zebra Cake and they are completely awesome and I'm pretty sure the government is ignoring the 50 percent inflation I've been seeing on them lately. I don't know if this is incompetence or reactionary arrogance ("We'll stick with the hexagonal cakes they serve at Quadrangle Club thank you.") but I know the whole program is broken.

> They have like 90 percent margins on those syrup/water mixes.

Not really. There's this myth that it only costs a few pennies to fill a cup with soda.

I was a manager at a Subway from 2006 to 2012, so I got to see the costs of all our food. I did the math and found it cost about 1.7 cents per ounce dispensed, so a 32 oz soda cost 54.4 cents to fill assuming no ice. The cup/lid/straw cost us about 12 cents. At the time, we charged $1.69 for the soda, giving a margin of about 60%. This margin of course went up if they used ice, but went down if they refilled it.

> 32oz soda ... $1.69

I'm sorry, what? People drink a whole litre of soda with their lunch? I don't understand this on multiple levels. Who would buy this, why would anyone sell it, and should that even be legal?

I take it you're not American.

We Americans love our soda far more than our friends around the world.

I had sticker shock when I went to Italy a couple weeks ago and if I ordered a soda at a restaurant, I'd pay 3-4 euros and get a tiny 8 oz can.

In America, at a restaurant, if you order a soda, it's $2-4, and you'll usually get a 12 or 16 oz cup and get free refills.

At least I stick to the Diet/Zero-Sugar varieties so I'm keeping the calories down.

Okay, what was the margin on sandwiches?

The cost of ingredients for sandwiches was 22-35%, depending on what sandwich it was. Of course, that's only for the ingredients themselves.

About 20% of revenue went to labor. I'm sure you're thinking, "But if you can make a sub in under a minute, and you pay $10/hr, shouldn't it be less?", but there's a lot of time spent not making sandwiches, such as cleaning, baking bread, and other food prep. Sure, the lettuce came pre-shredded in bags, olives and jalapenos are pre-sliced, but we had to slice the tomatoes, cucumbers, onions, and green peppers.

And then of course, there's the cost of rent and utilities, plus franchising fees. Overall, our profit margin was under 10%.

>They have like 90 percent margins on those syrup/water mixes.

Wait, nevermind you're right about that.

I know this is sarcastic, but bakery outlets can be a great way to get your sugar junk for cheap if there's one nearby, though they're all pretty close to expiration.

There's a reason movie theaters push supersized popcorn and sodas. The ingredients cost almost nothing. (OK, that's an exaggeration but they're certainly high margin--especially at movie theater prices.)

Are taxes not higher in Detroit for things like fast food? I'm asking since I think Detroit does have the highest property taxes in the state and one of the highest in the country.

It's not strange when prices are higher in places with high demand and fewer options.

1) Greed isn't a variable here - McDonalds today can't be more greedy than McDonalds in 2020. McDonalds in 2020 was already capped out as far as greed goes. They have been the poster child for corporate greed for decades. If greed could make prices go up they'd have been selling $3 burgers back in 1950.

2) If prices go up by 50% without an increase in costs, profit should go up by much more than 50% and share prices should be doubling, tripling, etc. If their stock is up a lesser percent than the price of their goods, that suggests they are being squeezed. The share price going up is effectively just another effect of inflation.

Why would you pick the situation that is clearly impossible when we're talking about inflation? Of course costs have increased.

If prices go up by 50%, and then you subtract the increase in cost, then any measure over 0 is potentially a greed-driven number.

It seems unlikely that zero companies are riding the wave of inflation acceptance in the population. At least some companies must be increasing their costs because most people aren't willing to check the math.

That isn't always greed related, sure, and some companies may be hedging against further cost increases on their end, and some may be using the increased profits to recover from COVID losses. But still, saying greed isn't a variable, as you did, seems a bit naive. Or am I missing some greater economic concept?

> Or am I missing some greater economic concept?

It is a practical concept. If you think greed is a variable, then you will have to explain why McDonalds suddenly got greedy in 2022 and from 1940-2021 they've been charitably keeping prices low. Any why they aren't raising prices right now to the even higher numbers that we'll probably be seeing in a few years.

They just sell for the price that they think brings in the highest profit. That is the algorithm. Their motivations aren't a factor and the algorithm is has always been the same. They could be greedy or they could be not greedy and that doesn't change the situation.

> It seems unlikely that zero companies are riding the wave of inflation acceptance in the population.

It is possible that there are zero of such companies. The populace doesn't get to set prices - otherwise prices would be cost to manufacturer for everything. Since companies make a profit, it is clear that consumers "acceptance" doesn't influence the price.

People aren't accepting these price rises. They're saying all sorts of things about the companies doing them. Doesn't change the fact that the price has changed.

If greed or the acceptance of consumers were important then the situation would look different. Neither matter much.

I feel like there is an opportunity for an app here that lets you input what you buy and see how the price has increased compared to the competition. There seems to be a lack of automated price comparisons here. I guess people can compare prices when shopping in store but if all companies raise their prices, I'd imagine some people would just stop buying if they knew about the price collusion more easily. I thought a cool app for the Apple AR goggles is to allow you to overlay the inflation increase of prices as you walk through a grocery store.

I was thinking about something similar for a personal meal plan app.

I want the ability to keep a list of recipes, and when I chose meals for a day/week, have the app take the ingredients list and scrape price sources (supermarket websites, etc.) and then give guidance on exactly where I should purchase each ingredient I need. Then simply track the scraped prices over time for the nominal inflation that you've mentioned.

As an addition to your excellent idea: recommend recipes with ingredients that haven't inflated as much as others.

I read somewhere that this summer strawberries have inflated a lot less in price compared to other fruits. It then led me to having this conspiracy theory that this is why I saw nonstop promotions for strawberry related products/promotions this summer.

> They have been the poster child for corporate greed for decades.

I would give that title to Walmart and EA Games.

stock is not 100% correlated with earnings/profiteering

https://corporate.mcdonalds.com/corpmcd/en-us/our-stories/ar...

plenty of numbers down from 2021 including margins

Sure but companies are also still reporting record profits in many cases right now so it's clearly not just input costs driving up prices.

Yes, but you have adjust those earnings for inflation... It's even more complex because inflation is variable across industries.

Their increased costs are already factored in because we're talking about profits though so I'm not sure how much use deducting that again would be for determining that.

It is not about deducting but adjusting. In an inflating currency with a constant profit margin, you are basically always going to report "record profits" because a 10% margin on $11 is nominally more than a 10% margin on $10 from a year ago but if the currency inflated 10% in that year, your profit isn't really record because it buys you the same amount of goods and services as it did a year ago.

>companies are also still reporting record profits

Adjusted for inflation?

Their profits account for inflation already in some ways because the increased costs are already accounted for when we're talking about profits by definition.

Inflation - value of currency going down - would also drive stock prices up even if the underlying value is stable.

>> And their stock is up 30% in the same timeframe. That's not inflation hitting supply chains, that's just corporate greed

You're assuming the stock price reflects increased profit. I don't doubt that, but it is not a given. IMHO the stock market has been going up for 20 years due to the 401K plan thing - the highest income people are indiscriminately dumping part of their pay into mutual funds every month. This is part of the reason white-collar jobs were more protected during covid, while hourly folks got told to stay home. If they made people with 401K stop working the market would have collapsed.

So, why did these greedy companies not raise prices to this rate when times were good? Surely there's more money exchanging hands when times are fine and dandy.

I think a lot of this is a combination of "because everyone else is doing it" and "because we can". I've seen a huge price increase in branded and prepared food products. Staples like fruit, veggies, eggs, etc. has gone up in price but much less than the branded.

I also think a lot of companies are running near capacity. Labor market is tight and the supply chain is still reeling from Covid. So there's not really an opportunity to lower/maintain prices to get market share.

The whole point of this inflation is, times ARE good. People have too much money to spend, the job market is too hot, which is why the fed is raising rates so fast

When times are bad, McDonalds sales go way down, then they re-introduce the $1 menu

I don't get people like you. You're saying that on one hand, McDonald's raises prices unreasonably high because they are greedy. But on the other hand, you're saying that other corporations are not eating up McDonald's market share with lower prices because... why? Because those other corporations are not greedy, and just want to help McDonalds out?

Porque no los dos?