McDonald’s Corp. (NYSE: MCD | MCD Price Prediction) has had trouble with low-income customers, its CEO, Christopher Kempczinski, said. “There’s some significant inflation there that the low-income consumer is having to absorb, and I think that’s affecting their outlook and their sentiment and their spending behavior.”
For the most part, McDonald’s earnings were modest. Total revenue rose 3% to $7.1 billion. Per-share earnings rose 2% to $3.18.
“Low income” does not have an exact definition. The Federal Poverty Level is $15,650 for a single person and $31,200 for a family of four.
Walmart Inc. (NYSE: WMT), the largest employer in America, recently stated that the average hourly wage of its front-line workers is $18. The figure can be as low as $14.
At $14 an hour, 40 hours a week, and 50 weeks a year, a Walmart employee makes $28,000 a year. That is before taxes, which would bring the figure to $25,000, or about $2,000 a month.
At an income of $15,000 to $30,000 per year, USA Facts shows that 38% of the income is allocated to housing, 18% to transportation, and 14% to food. That puts that amount for food at about $3,500 a year, or less than $300 a month.
McDonald’s has a $6 meal deal. That means a family of four can eat for $24 a meal. If the family only eats twice a day, the number goes to $48. Over the course of 30 days, the figure rises to $1,440.
The family gets a certain amount of government support, but a McDonald’s meal is still “expensive.” Can a Walmart employee eat at McDonald’s? It’s a close call.
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