McDonald's Earnings: Customers Shrug Off Higher Menu Prices as Inflation Soars

McDonald's has been increasing menu prices, and customers are eating it up. On Tuesday, the firm said, sales at McDonald's US restaurants open for at least 13 months leaped 3.7% in the 2nd quarter. According to McDonald's, that growth was driven by higher menu prices and "value offerings" on its regular menu and through its app.

Restaurant chains have been raising menu prices as inflation skyrockets, both because their costs are rising and because they see that customers are not shying away from paying more, at least not yet.

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To take the edge off higher prices, restaurants have highlighted value, anything from more food for your buck to an experience that makes the cost worthwhile. McDonald's has also been offering customers freebies, provided they are part of the brand's loyalty program and order through the McDonald's app.

Last month, for example, the chain gave away free fries to those customers in honor of "National French Fry Day." Late last year, the brand partnered with Mariah Carey to give away freebies to app users.

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And McDonald's has had success with its celebrity meals platform, which allows customers to order favorite items of musicians and other stars they admire. Customers may also feel like they're getting a better value at a fast-food joint because they spend so much more at the supermarket.

According to data released by the Bureau of Labor Statistics earlier this month, grocery prices jumped 12.2% in the year ending in June, not adjusted for seasonal swings. In that period, menu prices grew a relatively modest 7.7%.

Consumers may eventually pull back spending, primarily as more people feel like the US is in a recession. McDonald's CEO Chris Kempczinski nodded to the situation in a statement Tuesday. He said, "The operating environment across the competitive landscape remains challenging," adding, "We are planning for a wide range of scenarios."