Inflationary Pressures Pose Challenges for Crypto-Friendly Fast Food Chains
The United States is experiencing a surge in inflation, which could have negative implications for fast food chains that accept cryptocurrencies. Recent data from the Bureau of Labor Statistics shows rising inflation, leading to difficulties related to raw materials and the labor market. As the cost of essential ingredients increases, fast food establishments may face lower profits, decreased customer footfall, and higher labor costs.
Dining Dilemma: Soaring Cost of Eating Out
A report by Yahoo Finance reveals that Americans are becoming more reluctant to dine out. In January, the cost of eating out rose by 5.1% compared to the same month last year and by 0.5% from the previous month. In contrast, grocery prices only increased by 1.2% over the previous year and 0.4% over December.
According to Citi analyst Jon Tower, a pattern has emerged where grocery prices tend to rise faster than restaurant prices when commodity inflation outpaces labor inflation. Conversely, when labor inflation exceeds commodity inflation, restaurant prices tend to surpass those of groceries.
Impact on Crypto-Friendly Fast Food Chains
This trend suggests that as dining out becomes more expensive, consumers may choose to cook at home more often. Additionally, the higher cost of living results in increased prices for raw materials, posing profitability challenges for fast food chains.
Crypto-friendly fast food chains like KFC, Starbucks, and Subway are already facing the impact of soaring inflation. KFC struggled with high poultry prices, Starbucks saw a significant increase in coffee commodity prices, and Subway grappled with rising costs of vegetables and bread.
Furthermore, fast food chains with at least 60 locations across America will soon have to raise the minimum wage for their employees to $20 per hour. This change, taking effect in April, is likely to exacerbate profitability and cash flow challenges.
Crypto Payments Decline Amid Inflation Concerns
The effects of rising inflation extend beyond the fast food industry to crypto transactions. As restaurants face difficulties, customers may choose not to use cryptocurrencies as payment. Conducting crypto transactions on various platforms incurs fees, and with purchasing power already strained, customers may prefer cash or card payments to avoid additional expenses.
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