A former McDonald’s worker has sparked discussion after claiming that the company is now catering to those with higher incomes.
TikTok user Chef Mike Haracz (@chefmikeharacz) is a former McDonald’s corporate chef who has previously made waves on the platform after revealing information about the company. Previous hits from the TikToker include sharing the worst time to go to McDonald’s, revealing the truth about McDonald’s birthday cakes, and offering an explanation as to why the McDonald’s menu doesn’t change often.
Now, he’s inspired debate after claiming that McDonald’s has admitted that it is moving away from low-income customers.
“In an earnings call this morning, [McDonald’s] fully admit that they are losing the value customers, specifically those that are making $45,000 a year or less,” he says in the video, which currently has over 1 million views. “They are losing them to the grocery store, so they fully admit you can go to the store and make the same food for a lot cheaper.”
As the video continues, Haracz notes that McDonald’s has claimed profitability even as they lose foot traffic in their restaurants. This means that, though there may be fewer customers, the higher prices cause those buying from the fast food establishment to pay more, eventually resulting in more income for McDonald’s.
“Lower income folk—McDonald’s is not the place you want to go for affordable food options anymore,” he says. “They said, maybe in the future they’ll try to target lower income folks. The issue is gonna be they’ll probably make portion sizes that are ridiculous. You’re still gonna be paying a lot of money for what you get.”
This is a phenomenon widespread across the fast food industry. In a New York Times article titled, “Is the Entire Economy Gentrifying?,” authors Jason Karaian and Jeanna Smialek introduce the idea of “premiumization.” This refers to the tendency of companies to “[embrace] offerings that cater to higher-income customers—people who are willing and able to pay more for products and services.”
This takes multiple forms, including limiting discounts and increasing the perceived quality of the product, either through add-ons or through appearance changes that make the product look and feel more “premium.”
Haracz is correct in noting that McDonald’s singled out lower-income customers during a recent earnings call, though they do not directly say that they are attempting to eliminate that consumer base. Instead, they characterize this market as a “battleground.”
“…Where you see the pressure with the U.S. consumer is that low-income consumer. So call it, $45,000 and under,” said McDonald’s CEO Chris Kempczinski. “That consumer is pressured. From an industry standpoint, we actually saw that cohort decrease in the most recent quarter, particularly I think as eating at home has become more affordable.”
“If you think about middle income, high income, we’re not seeing any real change in behavior with those. We continue to gain share with those groups,” Kempczinski added later in the call. “But the battleground is certainly with that low-income consumer. And I think what you’re going to see as you head into 2024 is probably more attention to what I would describe as affordability.”
In an email to the Daily Dot, Haracz explained why the company referred to this group as a “battleground” market.
“It is a battleground market because it is the biggest consumer base they have been losing over the years, and they are less brand loyal, making it harder to bring them to the restaurant,” he stated.
“Their affordability means much smaller portion sizes due to the overpricing of their current core menu items,” he continued.
@chefmikeharacz Former #McDonalds corporate chef talks about them abandoning the value consumer. #McdonaldsLife #McDonaldsTikTok #McDonaldsMenu #McDonaldsSecret #McDonaldsSecrets #FastFood #FastFoodLife #FastFoodSecrets #FastFoodTikTok #fastfoodmenu #fypシ #BigMac #QuarterPounder #McNuggets #McChicken #DollarMenu ♬ original sound – Chef Mike Haracz
In the comments section of Haracz’s video, users shared their thoughts about higher prices at McDonald’s.
“$30 for 2 ppl to eat at McDonald’s is insane to me. The only time I go is if I have something on my app,” said a user.
“Yeah, this is most fast food joints these days. Even Taco Bell is getting to the point where you have to live menos,” joked another.
“I’d like to thank McD’s. Due to price hikes, we learned how easy and cheap it is to cook for ourselves,” declared a third.
The Daily Dot reached out to McDonald’s via email.