Biggest franchisor Burger King has been forced to cut its staple 10-piece chicken nuggets to eight and remove the Whopper from its discounted menu as it battles rising inflation.
Carrolls Restaurant Group, Burger King’s largest franchisor with more than 1,000 restaurants worldwide, has announced that the company will have to make some pullbacks due to inflation, especially on some of the fast food chain’s most famous discounted menu items.
In a recent earnings report, Daniel Accordino, chief executive of Carrolls, said the company is facing a rise in the cost of beef, which makes up a quarter of its food basket and has risen 33 percent over the past year.
As a result, popular fast food establishments will remove price restrictions on inexpensive menu items and reduce the number of nuggets in a meal from 10 to 8 pieces.
They will also remove the restaurants’ most popular item, the Whopper Burger, from the discounted menu. According to Accordino, the burger will no longer be available in “two-for-six” or “two-for-five” promotions.
Federal data on Friday showed that the personal consumption price index (PCE) rose 6.1 percent in January from a year ago, the biggest annual gain since February 1982. This indicator is an alternative to the CPI, or consumer price index, which rose by 7.5 percent. last month.
The Personal Consumption Price Index (PCE) rose 6.1 percent in January from a year earlier, the biggest annual increase since February 1982.
The PCE is an additional indicator of the more widely known consumer price index (see above), which hit a 40-year high of 7.5% last month.
Due to inflation, Burger King will lift price caps on inexpensive meals and reduce the number of nuggets in meals from 10 to 8 pieces.
Carrolls is also grappling with labor inflation after the company raised its average hourly wage by 14 percent year-over-year and kept hours from 6 a.m. to 11 p.m. as it competed to hire and retain workers, Marketwatch reported.
“The domestic food and paper manufacturers and distributors that supply most of our goods are facing labor shortages as well as higher fuel costs and are passing the increase on to us.
“As a result, overall commodity inflation last quarter was about 16% year-over-year,” Accordino said.
“While we cannot predict when this inflationary cost pressure will end, we can say that we believe that the percentage increase in the cost of labor and goods compared to last year will be moderate in the second half of 2022,” he added.
“We also intend to continue to change prices to partially offset inflation to the extent possible without impacting traffic.”
Burger King’s menu cuts came as U.S. inflation hit a 40-year high in January, with prices up 7.5% year-over-year, according to the Department of Labor. Pictured: Burger King in California on February 15th.
Burger King will also remove the Whopper burger from its discount menu and will no longer be available in the two-for-six or two-for-five promotions.
Carrolls Restaurant Group has announced that due to inflation, Burger King will have to retire some of its most famous items on the discounted menu.
Burger King’s menu cuts came as U.S. inflation hit a 40-year high in January, with prices up 7.5% year-over-year, according to the Department of Labor.
Federal data released Friday showed that the personal consumption price index (PCE) rose 6.1 percent in January from a year ago, the biggest annual gain since February 1982.
As the Ukrainian crisis shakes global oil markets, more rounds of painful price increases could await Americans.
Fed Chairman Jerome Powell now faces the tough decision of whether to continue raising interest rates to fight inflation as rumors mount that the US could face a “stagflation” environment if the crisis in Europe slows economic growth.
The so-called core PCE, which excludes food and energy price volatility, rose 5.2% year-over-year in January, the biggest increase since 1983.
The core PCE price index is the Federal Reserve’s preferred measure of inflation because of its flexible 2 percent target and is a complementary measure to the more widely known CPI, which hit a 40-year high of 7.5 percent last month.
High inflation is wiping out wage growth for many Americans and could hinder economic growth.
The situation in Ukraine increases the likelihood of a further decline in inflation, causing a sharp jump in oil prices around the world.
Brent oil prices soared above $100 a barrel on Thursday for the first time since 2014. Early Friday they dropped to about $98.70 a barrel.
For every $10 increase in the price of oil, a gallon of gasoline rises in price by about 20 cents.
Higher gas prices have a broad impact on commodity prices in general, with more than 70 percent of retail goods delivered by truck.
Oil prices at $100 a barrel would cut GDP growth by 0.1 percentage points in the second quarter and 0.5 percentage points in the third quarter, according to Moody’s Analytics.
The Federal Reserve is expected to begin raising interest rates in March to tame inflation, with economists expecting as many as seven hikes this year.
The annual increase in the PCE index is observed monthly from July to January.
But now there are fears that an economy hit by high oil prices may not be able to withstand monetary tightening.
“The implications of the current situation in Ukraine for the US medium-term economic outlook will also be factored into determining the appropriate pace” of interest rate hikes, Cleveland Fed President Loretta Mester said Thursday.
The risks could be as obvious as high oil prices hurting consumer spending and pushing up inflation even more, or as unknown as how Russia might react to US sanctions.
If Russia, the world’s second-biggest oil exporter, starts holding oil on global markets in response to sanctions, the shockwaves could be huge.
Richmond Fed President Thomas Barkin said the case for a U.S. rate hike remains “solid” but also called the invasion a “worrisome” development that will leave policymakers thinking about what could happen.
“Underlying demand is strong. The labor market is tight. Inflation is high and expanding,” Barkin said, describing a major case of rate hikes.
“But I will say that it is disturbing to hear the news. As always happens, you need to start and think about where something that you could not initially foresee could go.