What the End Of the McDonald's Dollar Menu Says About the U.S. Economy

What the End Of the McDonald's Dollar Menu Says About the U.S. Economy

R.I.P to the McDonald's Dollar Menu, which has entered its final months of existence.

McDonald's is ending its 11-year Dollar Menu tradition as the costs of the ingredients have exceeded the price of the items. The menu will be replaced with a new one called the "Dollar Menu and More." It will offer similar items priced between $1 and $5. 

The Atlantic's Derek Thompson highlights this chart showing why the Dollar Menu is no longer economically feasible:

 

The price of fast food has grown at a quicker pace than the overall economy (core inflation minus housing) in the past six years. 

While the dollar menu was created in 2002, this graph dates back to 2007. Over the longer time, fast food prices likely grew at even a greater rate compared to the rest of the economy. This indicates that fast food restaurants' underlying costs increased as well. For example,  the average price for a pound of beef in the U.S. has doubled in the past 10 years:


The price of white bread has increased 50% during the last decade as well. Yet, customers can still purchase a burger for a dollar. This is not economically feasible for McDonald's, hence the death of the Dollar Menu. 

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Danny Vinik

I'm a recent graduate of Duke University majoring in economics and public policy. I write frequently at my own site, called Political Algebra (www.dannyvinik.com). My main interests are economic policy and political analysis. Outside of journalism, I'm a big sports fan, particularly of Duke Basketball and the Boston Red Sox.

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