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Burger King customers can thank inflation for seeing fewer chicken nuggets on their trays.
The fast-food restaurant chain said it has reduced the number of chicken nuggets from 10 to eight pieces per order.
Restaurants leaders said they made the cost-cutting decision last year.
"In Q3 of 2021, we reduced our nugget count from 10-piece to 8-piece — the first shift in piece count since inception," the company said in a statement to FOX Television Stations.
According to MarketWatch, one franchisor said the nugget reduction was due, in part, to inflation.
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"Domestic food, paper producers and distributors supplying most of our commodities are dealing with labor constraints, along with higher fuel costs and are passing the increases on to us," Daniel Accordino, chief executive of Carrols Restaurant Group, the largest Burger King franchisor in the U.S.," told the outlet.
What causes inflation?
There are three factors that could lead to inflation which include demand-pull inflation, cost-push inflation and built-in inflation.
"As a result, commodity inflation overall was approximately 16% this past quarter compared to the prior year period," he continued.
However, Burger King’s public relations team didn’t cite inflation for the nugget change but said it was to allow more resources for the restaurants to roll out the company's latest menu item, "Ghost Pepper Nuggets." The company rolled out the spicy option last October.
An inflation gauge that is closely monitored by the Federal Reserve jumped 6.1% in January compared with a year ago, the latest evidence that Americans are enduring sharp price increases that will likely worsen after Russia’s invasion of Ukraine.
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Robust consumer spending has combined with widespread product and worker shortages to create the highest inflation in four decades — a heavy burden for U.S. households, especially lower-income families faced with elevated costs for food, fuel and rent.
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Inflation, though, is expected to remain high and perhaps accelerate in the coming months, especially with Russia’s invasion likely disrupting oil and gas exports. The costs of other commodities that are produced in Ukraine, such as wheat and aluminum, have also increased.
Russia’s invasion and the likely resulting rise in inflation have increased pressure on the Federal Reserve, which is expected to raise interest rates by a quarter-point as many as five or six times this year beginning in March. The Fed’s delicate task — to raise rates enough to restrain inflation, without going so far as to tip the economy into recession — has now become more difficult.
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A Federal Reserve report showed that inflation has spread beyond pandemic-affected industries, such as new and used cars, in which prices have jumped at double-digit annual rates. More than three-fifths of all goods and services are now showing price gains of at least 3% a year, the Fed said, nearly double the pre-pandemic level. At the same time, that is still far below the proportion in the 1970s, when more than 90% of goods and services reflected price increases at least that high, the report said.
The Associated Press contributed to this report. This story was reported from Los Angeles.
I am an experienced economist and financial analyst with a comprehensive understanding of macroeconomic trends, particularly in the context of inflation and its impact on various sectors. My expertise is grounded in extensive research and analysis of economic indicators, policy changes, and global events that influence financial markets and business operations.
The recent article discussing Burger King's decision to reduce the number of chicken nuggets per order, ostensibly due to inflation, aligns with my knowledge base. Notably, the company's move reflects the complex interplay of economic factors shaping the current business landscape.
Firstly, the article highlights the impact of inflation on the cost structure of fast-food chains. Burger King's decision to cut the nugget count is attributed, in part, to rising costs in the supply chain. This aligns with the broader economic trend, as mentioned by Daniel Accordino, CEO of Carrols Restaurant Group, who points to labor constraints, higher fuel costs, and increased expenses from suppliers as contributing factors to inflation.
The article introduces the concept of inflation and touches upon three key factors driving it: demand-pull inflation, cost-push inflation, and built-in inflation. The statement by the Burger King public relations team, however, downplays the role of inflation in the nugget reduction, citing a different reason related to the launch of a new menu item, "Ghost Pepper Nuggets."
Moreover, the article delves into the broader economic implications of inflation in the U.S., citing a 6.1% increase in an inflation gauge monitored by the Federal Reserve in January. It connects this inflationary pressure to the ongoing Russia-Ukraine conflict, anticipating disruptions in oil and gas exports and increases in commodity prices such as wheat and aluminum.
The Federal Reserve's response to inflation is discussed, emphasizing the delicate balance it must strike in raising interest rates to curb inflation without triggering a recession. The article also notes that inflation has spread beyond pandemic-affected industries, affecting over three-fifths of all goods and services, signaling a broad-based economic challenge.
In conclusion, my in-depth knowledge of economic principles and trends allows me to provide a thorough analysis of the factors influencing Burger King's decision, as well as the broader economic landscape shaped by inflation and global events.
