The Burden of Rising Burger Prices: A Look into the Economics Behind the Quintessential American Meal
Two all-beef patties have experienced an approximate increase of 5.9% in price compared to this same time last year. Let us delve deeper into the fluctuations of various components that constitute the classic burger experience.
The special sauce adds a 3.1% hike to your bill, while lettuce and cheese have seen decreases of 6.1% and 2.8%, respectively. However, the price of pickles (up 3.3%), onions (an increase of 1.3%), and sesame seed buns (priced at a higher 1.7%) may be causing concern for consumers.
Although overall food inflation is not currently surging as rapidly as it did in previous months, the Consumer Price Index reported a flat rate from February to March and a three-year low on a yearly basis. Nevertheless, some commonly purchased items like eggs, bacon, and coffee continue to rise faster than pre-pandemic levels (Source: Consumer Price Index).
Tyler Schipper, an associate professor in the economics department at the University of St. Thomas in Minnesota, sheds light on this issue: “The price of ground beef has become a significant point of reference for evaluating the economy. Given the multitude of stories about economic conditions, it’s essential to understand how consumers perceive the economy and what they use as a benchmark.”
As this era of high inflation enters its third year, pricier burgers have become hot topics, with some cities reporting McDonald’s Big Mac combo meals nearing the $20 mark. This development has left a bitter taste in consumers’ mouths and even sparked controversy among fast-food giants like Wendy’s, which faced backlash regarding proposed dynamic pricing plans.
The situation is not much different for burger establishments and their patrons. The small New Mexican village of San Antonio, home to the renowned green chile cheeseburger, has seen its iconic Owl Burger become more expensive since the onset of the pandemic.
Janice Argabright, the fourth-generation owner of San Antonio’s Owl Bar & Cafe, shared her challenges with News Finder: “As a small mom-and-pop establishment, we don’t want to be too high for our customers. But we need to gradually raise prices so that we can cover costs and pay employees and invoices.”
Across the country in Orlando, Beth Steele from Beth’s Burger Bar faced a similar dilemma: absorb increasing costs or pass some on to customers. In January 2023, her restaurants raised their menu prices by about 25 cents to 60 cents for each item, a decision that faced minimal pushback and allowed the business to maintain steady growth despite the rising costs.
Despite the challenges brought on by inflation, various factors contribute to higher burger prices. A primary driver is limited supply due to drought and other rising costs: The US cattle inventory reached its lowest level since 1951 at the beginning of the year, according to the American Farm Bureau Federation. Moreover, recent wildfires in the Texas panhandle had devastating effects on ranches and cattle in the area.
According to the American Farm Bureau Federation, “Consumers could see record-high beef prices toward the end of 2024 and into 2025,” as processors compete for a shrinking supply of cattle. However, some relief is on the horizon; overall food prices are up only 2.2% (lowest since May 2021), grocery prices are up 1% (the lowest since June 2021), and restaurant prices have risen by 4.5% (the lowest since July 2021).
Although food prices have increased significantly since the Covid-19 pandemic, they are only marginally higher than a year ago. Schipper shared his perspective: “Grocery bills might not be as high as people think, but their expectations about what their grocery bill should be are resetting. This process will take time.”
In conclusion, the price of burgers and other food items has become a significant talking point as the world grapples with high inflation. Consumers, businesses, and policymakers must navigate this challenging economic environment to maintain financial stability while providing essential goods and services at reasonable prices.
