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Since their introduction in the 1970s, kids' meals have been a staple of fast-food drive-thru menus. For kids, it's the excitement of getting a tasty meal and a toy, while for parents, it's the convenience of a quick and affordable option. However, as inflation rises, the cost of these meals is far from what it once was. In fact, kids' meal prices have surged significantly over the past decade, with some chains seeing price hikes well above the national inflation rate, according to a new analysis from FinanceBuzz.
FinanceBuzz's study shows that, on average, kids' meal prices have jumped by 43% over the past 10 years, compared to the 33% national inflation rate. Popeyes leads the franchise pack, increasing its kids' meal prices by 62%, nearly double the inflation rate. Other franchise chains, such as Jack in the Box, Sonic and McDonald's, have increased prices by more than 50% during the same period.
"Generally, menu prices have risen due to increased commodity and labor costs," Erik Herrmann, a partner at CapitalSpring, an investment firm specializing in food service, told Entrepreneur. "Both of those input costs have increased dramatically in the last 10 years. Minimum wage in California went from $9 per hour to $20 per hour."
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Meanwhile, Dairy Queen, Wendy's, Burger King and Culver's managed to keep price increases lower than the inflation rate. Dairy Queen raised kids' meal prices by 21% — the smallest increase among the 12 chains studied.
Still, a "kids' meal value war" won't happen for a few reasons, Herrmann says. First, many restaurants offer a "kids eat free" promotion on slower days (typically Monday through Thursday), where children can eat for free with the purchase of an adult entrée. These promotions encourage parents to dine out and spend more while feeling like they're getting good value for their children's meals.
"Also," Herrmann adds, "kids' meals are generally higher food cost to restaurants, so discounting them would make them less profitable. Restaurant brands are better suited discounting other items on the menu to drive traffic and compete among other restaurants that discount kids' meals."
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Read More: FinanceBuzz
