The gluten-free movement in particular is causing restaurants to rework their menus to provide alternate items, catering to consumer needs. As menus are becoming larger to accommodate the diverse preferences of the population, supply costs are increasing in tandem. McDonald's is currently facing higher supply costs for every new item it adds to its menus. Rising fuel costs are resulting in higher supply costs as well, which puts pressure on McDonald's to raise product prices. .
Although there is projected growth in the fast-food industry, consumers are choosing to eat out less because of diminishing discretionary income. Since the latest recession, unemployment has been hovering around 8%, causing consumers to eat at restaurants less frequently. When consumers do choose to eat out, they are seeking increased quality and value when selecting their meals. Consumers have revealed that their primary determinant of restaurant selection is value for their money, followed by convenience. McDonald's will need to focus their efforts on creating more value and quality within their menus in order to capture the consumer's changing needs. One consumer segment that is slowing, changing the way the fast-food industry competes is the young adult segment, comprised of 18-32 year olds. The young adult segment is considered the most profitable group, because they frequent a given chain on average 2-3 times a week. This younger generation seeks transparency and high ingredient quality when making food selections. It is important to this generation that the establishments they support are also involved with social issues such as environmental sustainability. With these important factors in mind, restaurants that cater to this generation's needs are more likely to retain their loyalty. In order for the fast-food industry to remain profitable, it will be crucial to capture this important generation. .
Competition within the fast-food industry has also become increasingly fierce.
