Key Points
- US inflationary pressures are likely to affect crypto-friendly fast food chains negatively, leading to potential decline in their fortunes.
- Recent data shows a surge in inflation, causing challenges related to raw materials and labor costs.
- Increased costs of dining out are causing consumers to prefer home-cooked meals, leading to profitability issues for fast food chains.
- Crypto-friendly fast food chains such as KFC, Starbucks and Subway are already experiencing the impact of soaring inflation.
- Fast food chains operating at least 60 sites across America will soon need to increase their minimum wage to $20 per hour, potentially exacerbating profitability and cash flow challenges.
- Rising inflation may also impact crypto transactions, as customers may prefer to avoid additional expenses and opt for cash or card payments.
Inflation in the United States is expected to impact crypto-friendly fast food chains.
This could potentially lead to a downturn in their fortunes.
Dining Dilemma: Cost Of Eating Out Soars
Yahoo Finance reports that Americans are increasingly hesitant to dine out due to rising costs.
In January alone, the cost of eating out rose by 5.1% compared to the same month last year and by 0.5% from the previous month.
On the other hand, grocery prices saw a more modest increase of 1.2% over the previous year and 0.4% over December, stabilizing thereafter.
Citi analyst Jon Tower has noted a pattern in the past where, if commodity inflation outpaces labor inflation, grocery prices tend to rise faster than those at restaurants.
Conversely, when labor inflation exceeds commodity inflation, restaurant prices tend to surpass those of groceries.
This trend suggests that consumers may opt to cook at home more frequently as the cost of dining out continues to rise.
Additionally, the higher cost of living translates into increased prices for raw materials, posing profitability challenges for fast food chains.
Impact on Crypto-Friendly Fast Food Chains
Several crypto-friendly fast food chains are already facing the impact of soaring inflation.
KFC, known for selling the “Bitcoin Bucket,” encountered difficulties as poultry prices reached an all-time high last year.
Similarly, Starbucks, which allows customers to pay with Bitcoin, faced a more than 40% increase in commodity prices for Arabica coffee since the pandemic began.
Subway, one of the early adopters of Bitcoin as payment, has struggled with the rising costs of essential vegetables, bread, and other raw materials.
Besides the escalating costs of raw materials, fast food chains operating at least 60 sites across America will soon face the need to increase the minimum wage for their restaurant employees to $20 per hour.
This impending change, set to take effect in April, is likely to exacerbate challenges related to profitability and cash flow.
Crypto Payments Dwindle Amid Inflation Concerns
The impact of rising inflation extends beyond the fast food industry to the realm of crypto transactions.
As restaurants struggle to maintain their foothold in the market, many customers may opt to avoid using cryptocurrencies as payment.
Conducting crypto transactions on various platforms incurs fees, and with purchasing power already under strain, customers may seek to minimize additional expenses and instead prefer cash or card payments.
