NYC Is Killing Fast Food Chains… Why?

In this 23 May 2024 video, New York City resident Cash Jordan focuses on the fast food industry and how expensive fast food has become. Many companies are losing massive amounts of money, but in NYC there’s a new threat to these businesses which could result in a loss of fast food outlets in the city.

https://youtu.be/ej6QjMiK7DU

Partial transcript…

The average price of a quarter pounder at a McDonald’s in parts of the country has more than doubled in just the last 10 years. Rising prices along with inflation is why customers are turning to cheaper alternative. All Over America people are being forced to make tough choices but nowhere are those choices tougher than in New York City where chains like McDonald’s are now so expensive most of the people walking by can’t afford to eat there making you wonder how long it’s going to be before the outlet shuts down. Seventeen dollars for three filet of fish at McDonalds. Are you you kidding me? Price hikes have a lot of people asking why is fast food getting so expensive. 

Inflation continues to wage War on Americans of every income and wallet size. It’s also hitting what traditionally had become the cheaper option. Other fast food chains like Chipotle, Starbucks and Pizza Hut have also raised prices. Inflation is now showing signs of slowing down. Iin April groceries ticked up slightly compared to a year ago but 
fast food prices soared 4.8 percent. How does that affect your budget when you’re paying more for fast food? what does that do? This turkey sub cost me over $11. The bad news about inflation is prices aren’t going to go down. After 2 years of menu price hikes big companies are finally feeling the push back from diners.

What nobody is talking about is that although all these prices are ridiculous right now they’re not completely the fault of these businesses especially in New York. In fact these prices are partly because New York’s leaders keep secretly doing things behind the scenes to make life harder for the purveyors of junk food, plus the cost of everything here is going through the roof faster than anywhere else. Rents for apartment spaces and restaurant spaces are approaching all-time highs, squeezing both consumers and businesses. With 40 percent of American household budgets for food going to restaurants, this puts fast food chains on a collision with reality as people now have less to spend  than they did 2 years ago. You would think that in a city with rising costs on everything from underwear to deodorant to milk it would mean fast food, while more expensive than it was, would be the cheapest option for many but shockingly, fast food prices are rising three times faster than grocery store prices, which means that’s no longer the case. Some say the writing is on the wall for these junk food joints because although a third of us eat fast food every day in some form, McDonald’s has actually missed their first earnings estimate in 2 years, which means the real reason this is happening is because customers have hit a wall. They cannot afford what used to be the cheapest option for food anywhere in the country, Although the fast food Giants have plans to win back customers some of those plans might not work in America’s most expensive city because local leaders keep finding ways to raise the cost of these businesses even when they try to lower prices and save people money.

Before we get into the massive problems New York is causing for these businesses, we’ve got to look at why fast food became such a ripoff in the first place. Because once we see how these companies have already put one foot in the grave themselves, it’s going to make a lot more sense how operating one of these places in New York City might become downright impossible, forcing some of these places to shut down permanently.

You know when you go into a grocery store and you see prices are higher there it should make sense when a fast food chain tries to go out and buy the same ingredients to make their food it is also higher for them, The prices for meat, potatoes and eggs, all basic goods, are way up but the other problem is wage inflation. For example, New York City now has a $16 an hour minimum wage, double the $8 which was the hourly minimum wage 10 years ago. This means a restaurant can only afford to hire half the number of people today. This helps to push prices up but it gets even worse when you look at the next problem they’re dealing with. The fast food labor market became increasingly competitive for employers as companies struggled to fill their restaurants in 2022. The number of employees in the limited service restaurant category were still below 2019 levels during that same time. An interesting situation, You would think that in a tough economy where people are getting squeezed financially, a place like Subway wouldn’t have an issue finding people to pick up an extra shift when they’ve got some free time but that is not the case. When there’s a worker shortage, prices have no choice but to go up. 

Fast food items are now so pricey many customers are just passing on making the purchase altogether and that’s a problem because for many people the fastest meal of the day is lunch and after a couple of weeks of not eating out these customers might be gone foreverSpecific to New York, there is also another problem for all of these businesses which is making them even more expensive and that problem can be seen with this open Panda Express location which sits next to another closed business. Since both locations are in the same building, if you were the landlord of this building, how do you think you’re going to make up the rental money being lost due to the empty location? You’re going to
have to raise the costs for Panda Express and add to the restaurant owner’s financial burden. 

Just consider, the number of vacant stores here in New York City has nearly doubled over the last 4 years. This is a big problem and as landlords lose money on vacant storefronts nobody wants, they are going to have to get that money from everybody else still in business. In a high tax, high crime city like New York it’s just another cost of 
existence for these businesses which in a sense are subsidizing their landlord’s losses on other properties. Another aspect to consider is how high crime areas make people less likely to frequent the area and look for anything to spend money on. When one business leaves an area, it can cause the other businesses nearby to tank as well and lead to an area impossible to rent out location in.