In the early 2000s, McDonald's was in genuine trouble. Flagging sales, a tumbling stock price, and the company's first quarterly loss in its history. The turnaround came from the most unglamorous place imaginable: a menu where everything cost a dollar.

The Dollar Menu reversed three years of declining sales, ballooned revenue by 33%, and reminded the entire industry of something it had apparently forgotten. That there were a lot of people out there who needed food to be cheap, and whoever served them cheapest would win.

That was the deal. For decades, it held. But it's not holding anymore. 

Fast food prices at major chains have risen by around 60% since 2014. To put that in context, overall inflation across the same period ran at about half that rate.

A McDouble that once sat comfortably on the dollar menu now costs you somewhere around three dollars. The Taco Bell Beefy 5-Layer Burrito went from $1.59 to $3.69. That's a 132% increase, and again, this is the value menu. The items specifically designed to be affordable.

The consequences are showing up exactly where you'd expect. McDonald's own CEO told investors recently that traffic from low-income households had dropped by double digits, while traffic from higher earners was up by nearly as much. The customer the Dollar Menu was built for is leaving.

Now, there are real reasons behind this. Minimum wage increases, a tight post-pandemic job market, and supply chain costs that never fully normalised after 2022 have all fed into the final price you see on the board.

The franchise model doesn't help either — franchisees carry their own overheads, and when input costs rise, the menu price is the most obvious lever to pull.

So the price rise is the compounding result of a lot of cost pressures hitting an industry that was already running on very thin margins.

And it may be doing something nobody planned for.

Fast food is calorie-dense, nutritionally poor, and its overconsumption is one of the clearest documented contributors to obesity. And obesity, it turns out, is not a cheap problem.

The annual medical cost of obesity in the US sits at around $173 billion, before you factor in productivity losses and disability costs that push the broader economic burden above $1.4 trillion annually.

So if fast food pricing is accidentally pricing people out of the drive-through, is that also accidentally functioning as public health policy?

Price signals reshape behaviour — that's just economics. A Big Mac meal at $12 in some US cities is, however unintentionally, doing something that sugar taxes and public health campaigns have spent years trying to do.

Some would argue it's not entirely different from a tobacco levy — a price increase that discourages a behaviour with high social costs, just without any of the policy intent, and without the government collecting any of the revenue from it.

But the counterfactual isn't necessarily people discovering the joy of home cooking.

Lower-income households priced out of fast food are not automatically reaching for vegetables. More likely they're reaching for the cheapest available calories, which in most developed economies means ultra-processed grocery staples that are often not nutritionally much better than the burger they replaced.

So fast food inflation may be accidentally pushing some households toward better habits, but it’s more likely just making life harder for the people with the least room to absorb a price increase.

In 2023, the US was hit by 28 weather and climate disasters causing over $1 billion in damage each. For most of the past four decades, the average was fewer than nine per year.

Insurance was never supposed to be exciting. It worked precisely because it wasn't — risks were local, infrequent, and predictable enough to price. That world is changing fast.

In our latest video, we look at what happens to an economy when insurance stops working. Around 6 million American homeowners are already uninsured, representing $1.6 trillion in unprotected property value. Insurers are pulling out of entire states. And the consequences go well beyond higher premiums.

So when insurance can no longer absorb the risk, who does?

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