PharmaHeretic

May 28, 2024

While the price of groceries (in aggregate) has gone up by 20-30% over past 2-3 years, the rise in fast-food prices has been much steeper. For practical purposes, the increase in prices at many fast-food chains over the same period exceeds 100%. In other words, fast-food items (esp common meal combos) now cost about twice what they used to cost in early 2021. The increase is even higher for so-called “specialty” items to the point where the prices have reached levels typically seen in sit-down restaurants. My first observation, then, is that the fast-food inflation is about 3x or more the rise in food over the same period. Let us now tackle the BS about minimum wage increases as the cause of this inflation, starting with the observation prices of food in family-run restaurants has increased at about the same rate of general food inflation rather than the much higher rates seen in fast-food chains? Unless you want to believe that these family-run restaurants/ outlets are running at a loss for the past 2-3 years, it becomes apparent that something else is behind recent fast-food price inflation.

Which conveniently brings us to quarterly and annual profits reported by large fast-food chains over the same time period. The short version of that story is these chains made high, and in some-cases record, profits over the time-span in question. It is only in the past two quarters that we are finally seeing the first signs of a downturn in their profits. In other words, a lot of the extra money collected by increased fast-food prices went to the senior executives and large stock-holders of these corporations. This is why the price increases at smaller chains and family-run restaurants have been in line with general rates of inflation in food prices while large fast chains have increased their prices by over 3-fold those rates during the same period. To make matters more interesting, many large fast-food chains have also introduced over-priced “premium” offerings and started charging extra for even minor customization. This has been accompanied by industrywide decreases in the quality of fast-food as documented by many people include famous YouTubers such as Reviewbrah (Clip 1, Clip 2). To be fair fast food quality has been on a downward trajectory for the past 2-3 decades, but the decline in past 2-3 years has been especially large and hard to conceal.

Some attribute the most recent round of quality declines and increased costs to the effect of the over-hyped COVID scamdemic. They invoke issues such as supply chain disruptions and government payments in 2020 and early 2021 to explain the current state of the fast-food industry. However this is 2024, almost every person and business is past the scamdemic and yet these problems have only gotten worse. But there is a different theory for how government responses set off a chain of events which caused the current situation in fast-food industry. It starts with how governments (esp in USA etc) preferentially shut down small business, including non-chain restaurants, while allowing corporate chains to remain open in their ineffectual attempts to contain that virus. Consequently, many of these small restaurants closed increasing the volume of customers who ended up at fast food outlets. The parasites, aka MBAs, running these chains also realized that they could fleece customers out of more money by offering delivery through services such as UberEats and DoorDash. It was these conditions (temporarily reduced competition and rise of delivery apps) which allowed the MBAs running fast-food chains to start the process of jacking up their prices.

To summarize, the current inflation in fast food prices has everything to do with dumb government decisions creating an opening for greedy MBAs to jack up prices while allowing quality to slip even further. There is also the issue of large fast-food chains have become oligopolies with little real competition, especially outside larger cities and ethic or relatively affluent neighborhoods. This is oddly reminiscent of how the quality and availability of cars and consumer appliances in pre-1991 Eastern European countries was noticeably inferior to what was available in the West at that time due to lack of real competition. It seem that the financialized form of capitalism ends up giving you the same outcome as seen in the quality and prices of the mundane such as printers and smartphones to big ticket items such as houses, non-Japanese cars and university education. In an upcoming post, I will go into the differences between traditional capitalism versus financialized capitalism- specifically how financialization of the economy creates a whole new set of perverse incentives which feed the endless appetites of the parasitic managerial class.

What do you think? Comments?

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