Crypto-friendly fast food chains are bracing for a rough patch ahead as inflation continues to rise. The latest US inflation data has revealed significant increases in the cost of raw materials and labor, posing challenges for fast food chains in terms of lower profits, reduced customer traffic, and higher labor expenses.
According to a report from Yahoo Finance, Americans are becoming more hesitant to dine out as the cost of eating out soared by 5.1% in January compared to the same month last year. In contrast, grocery prices only saw a 1.2% increase over the previous year. This indicates that consumers may opt to cook at home more frequently as dining out becomes more expensive, which will further impact the profitability of fast food chains.
In particular, crypto-friendly fast food chains face additional challenges. KFC, for example, which famously introduced the “Bitcoin Bucket,” is facing surging poultry prices. Starbucks, which allows Bitcoin payments, is grappling with a 40% rise in Arabica coffee prices since the pandemic’s onset. Subway, one of the earliest adopters of Bitcoin as a payment method, is feeling the pinch from higher costs of vegetables, bread, and other raw materials.
Moreover, fast food chains with a substantial presence across the US will have to increase their minimum wage for restaurant employees to $20 per hour from April onwards. This wage hike will further strain profitability and cash flow.
As fast food chains confront these challenges, crypto transactions are also likely to decrease. Rising inflation and the financial strain on restaurants may discourage customers from using cryptocurrency for payments, as crypto transactions often entail additional fees. With purchasing power already under pressure, customers may prefer to use traditional payment methods like cash or cards to avoid extra costs.
Additionally, fast food chains may struggle to attract low-income customers, posing another obstacle for the crypto-friendly establishments. This issue has already impacted brands like McDonald’s, as attracting low-income consumers has become a competitive battleground. A decline in customer appeal could further reduce the use of cryptocurrency as a payment option.
Therefore, the future looks uncertain for crypto-friendly fast food chains as they navigate the challenges posed by inflation, rising raw material costs, labor expenses, and decreased customer demand for crypto payments.