McDonald's is mad about $18 Big Mac meal complaints and these other 'myths'

By Tomi Kilgore

Fast food giant calls bunk on reports that the cost of a Big Mag has doubled in 5 years. It's only up 21%.

All those stories about how expensive Big Mac burgers are now have made McDonald's Corp. very mad, and the fast food giant isn't going to take it anymore.

Joe Erlinger, president of McDonald's USA, wrote a letter to the company's U.S. "fans" to dispel a number of myths, particularly those about hyper-inflation. For a company that feeds nearly 90% of the U.S. population every year, he said he feels a responsibility to make the "real facts" available.

"Recently, we have seen viral social posts and poorly sourced reports that McDonald's has raised prices significantly beyond inflationary rates. This is inaccurate," Erlinger wrote.

He said reports about a Big Mac meal being sold for $18 at one location "frustrates and worries" him, even if it was at just one of McDonald's 13,700 restaurants.

"More worrying, though, is when people believe that this is the rule and not the exception, or when folks start to suggest that the prices of a Big Mac have risen 100% since 2019," Erlinger wrote.

Don't miss: Yes, that Big Mac meal may cost $18 - but there's one good reason for it.

McDonald's stock (MCD) rose 0.6% in midday trading Thursday, after closing the previous session at a seven-month low. It has dropped 8.1% so far in May, to put it on track to suffer a five-month losing streak. That would be the longest such streak since the six-month stretch that ended October 2016.

The average price of a Big Mac in 2019 was $4.39, Erlinger said. Despite the effects of the COVID pandemic, and big jumps in supply chain and labor costs, and other inflationary pressures since then, the average price of a Big Mac is now $5.29, an increase of 20.5% in five years.

Based on the consumer-price index inflation calculator provided by the U.S. Bureau of Labor Statistics, the Big Mac's price should have actually increased a little more in five years, to $5.39.

Erlinger noted that one-off, large price increases can happen, given that franchisees, who operating more than 95% of McDonald's restaurants in the U.S., set menu prices for their restaurants to offset the increased costs to run those restaurants.

He stressed, however, that McDonald's is always looking to minimize the impact of price increases with special offers.

"I fully expect the prices at your local McDonald's to be an area of conversation and focus in the coming months," Erlinger said.

As part of those conversations, "I hope its helpful to see some of the common myths that I've encountered, and the facts that go along with them."

Here some of those "myths," and McDonald's response to them:

Myth: McDonald's price increases are a result of greed and price gouging. McDonald's response: "False." Average prices increases are within the range of other fast-food restaurants over the past five years. And restaurant margins are roughly the same now as they were in 2019, "which is the opposite of so-called 'gouging.'"Myth: The average menu prices at McDonald's have more than tripled the national inflation rate. McDonald's 'Fact': "This is just simply not true." The company said the rate of increase in average menu prices, between 2019 and 2024, was lower than the rate of inflation. The average price of an Egg McMuffin has increased to $4.29 from $3.49 in 2019, which is a penny more than what the CPI Inflation Calculator would suggest, while the average price of a quarter-pounder with cheese has increased to $5.39 from $4.49 but the CPI calculator suggests it should be $5.51.Myth: A Big Mac Meal costs 104% more than it did in 2019. McDonald's response: The average price of a Big Mac Meal now is $9.29, up 27% from the average price of $7.29 in 2019.Myth: The price of medium fries have jumped 138% since 2019. McDonald's response: False. The average price of medium fries is now $3.29, or 44% more than the $2.29 it cost in 2019.

McDonald's stock has shed 15.4% year to date, while Consumer Discretionary Select Sector SPDR ETF XLY has slipped 2.3% and the Dow Jones Industrial Average DJIA has gained 1%.

-Tomi Kilgore

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05-31-24 0648ET

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