The Cost of Food: McDonalds To Phase Out Free Refills

I'm old enough to remember when no fast food restaurants offered free refills, but the actual cost was so low to restaurants that it started to become an easy way to compete; and eventually it became the norm and has been that way for so long that most Americans take it for granted. Well, that is going to be ending. The New York Post reports that McDonald's is getting rid of free drink refills, and other restaurant chains will probably be following suit. The article relates:

    Last year, it was reported that Mickey D’s was gradually phasing out its self-serve soda fountains for dine-in customers by the year 2032.

    However, a company rep told Business Insider at the time that charging for refills would be left “at the discretion of individual restaurant owner/operators.”

    But the direction in fast food, beyond just McDonald’s, seems to be telling customers to suck it up and order another drink.

    “McDonald’s tends to be a leader in the industry. And very often, when they make big changes, other restaurants follow suit. McDonald’s is very smart about their costs,” said Darren Tristano, CEO of consulting firm FoodserviceResults.

    Panera Bread customers and even those at the grocery store Wegmans have also observed a vanishing of self-serve soda machines, according to Marketplace.

    Cornell University food and beverage management professor Alex Susskind told the outlet that food courts across western New York and Pennsylvania are following the same trend and putting machines back behind counters.

The article lists four reasons for the change:

1. The added cost of maintaining and cleaning up the self-serve machines; 
2. Drink theft;
3. Plain penny pinching since it is literally pennies per drink for the syrup and,
4. Discourage customers from dining-in. “They’d much rather you have drive-thru, you get some food, you get your drink, and you get out of there versus you hanging around and having to deal with people in the restaurant.”

    It seems a weird choice since it is being widely reported that McDonald's has seen a drop in the number of customers due to record high prices for its meals at the same time it has seen both record profits and increased profit margins. 

    CEO Chris Kempczinski said at last month's earnings call that the chain has to be 'laser-focused on affordability.' It came after sales slipped - particularly among lower-income Americans. 

    The new deal an attempt to draw back customers who have been priced out by the chain's soaring menu prices, which now see a Big Mac meal priced as high as $19. 

    Chains such as McDonald's, Wendy's and Starbucks have seen lower-income customers opting to eat more meals at home amid a cost-of-living crisis, forcing the companies to offer steeper promotions to attract them to their outlets.

    McDonald's, which has a higher exposure to the lower-income cohort, saw its global sales growth slowing for the fourth straight quarter.

    'I think it's important to recognize that all income cohorts are seeking value,' CEO Chris Kempczinski said on a post-earnings call last month.

McDonald's is going to attempt to lure customers back by copying the Biggie Bag meals offered by Wendy's: offering its own $5 budget meal with a small sandwich, a few chicken nuggets, small fries and small drink. But here is the catch: the meals will only be available for one month (starting on June 25). And the advertising for the meal is being subsidized by Coca-Cola which will contribute $4.6 million. 

    Leftists have been pushing for years for poor people to eat less at McDonald's and now it looks like they will get their wish. But it comes as a result of extreme food inflation due to the Biden economy, including many restaurants adding surcharges to "cover health insurance, inflation, credit card transactions or even tap water." Ah, yes, there goes one of my favorite drinks as a poor high school kid: the pine float (i.e., a glass of water with a toothpick floating in it). 

    But, in true Orwellian fashion, we are seen a new narrative being pushed to the effect that we shouldn't believe our lying eyes. The New York Post recently published an article entitled: "Food may be expensive, but here’s why it’s actually cheaper than you think." The author writes:

    The reality is food costs are higher than most of us can remember. Last year, the cost of food rose close to twice as fast as inflation, according to the food at home Consumer Price Index (11.3% vs. 6.5%), so the cost of groceries, or dinner out,  is outpacing the rising costs of other key purchases. Most of that food inflation stems from huge, global disruptions to the supply chain (war, fuel, labor) that are generally hidden from consumers. There are, to be sure, food companies who kept prices the same but shrunk the number of cookies or chips in the bag (aka “shrinkflation”), and others who simply jacked up food costs with impunity. 

    But most smaller, privately owned food businesses (and a few big ones, too) operate on tiny margins and a mission to feed people better food. If we don’t support them, we’ll be the worse for it. Because cheap food is not inherently inexpensive if it’s made with crappy ingredients, and there’s much more to a label than the price.

    Consumers have every right to stop buying a product or frequenting a restaurant who’s cost offends them. But before the outrage sets in, here are a few things to consider: What’s the size of that business? Do you know anything about its ownership structure? Most importantly, are there real ingredients in their products? Is sugar up at the top of the label? While consumers haven’t always had to think about labor, or weather, or rent, this “polycrisis” is a good time to start thinking holistically about what we’re consuming and showing support for the businesses we want to see survive. 

    The question we should be asking today isn’t why food is suddenly more expensive, but rather, why has food been so inexpensive for so many years? ...

Ah, yes. The whole "you've been paying too little for your food" argument.

    In a similar vein, the article "‘The era of cheap food is over,’ says Waitrose chief," it argues that the green revolution that gave us plentiful and affordable food is too destructive to the environment, pushing a practice called "regenerative farming"--essentially returning to pre-WWII (or earlier) methods of farming that didn't rely on fertilizers and pesticides or as much plowing. The article also suggests that going to such a scheme will require people to eat less meat in order to return fields producing animal feed to producing food for humans.

    In short, the average person will just have to get use to a declining standard of living.