Over the last several years, many videos on social media have accused restaurants of price gouging. One commentator claimed that she thinks that restaurants are “taking advantage of us.” While costs have certainly risen due to inflation and other factors, what these criticisms miss is one simple truth—no one is forced to eat out. In a free market, where transactions are voluntary, price gouging simply does not exist.
Prices are not arbitrary; they are subject to real market conditions, including supply, demand, and psychological perceptions of value. Furthermore, food is generally a commodity–meaning that it’s commonplace and there’s lots of competition in the market–and is priced as such. Unless a restaurant is truly unique and can function as a monopoly because of its brand value, like a restaurant with a Michelin Star rating, perhaps, food businesses typically have very limited pricing power. They instead charge what the market can bear. If restaurants truly tried to levy exorbitant prices that were beyond their customers’ willingness to pay, they would lose business. This phenomenon has been witnessed time and time again.
McDonald’s offers a clear case study. Over the last couple of years, people online have lamented that McDonald’s is no longer affordable and that prices are too high. Consumers responded accordingly. In Q2 2025, the company had the largest year-over-year decline in sales since the COVID-19 “pandemic.” Later that year, the company reintroduced the “Extra Value Meals” to lure back price-sensitive customers. Ever since, their sales have normalized, and revenue is increasing.
Social media critics also often fail to consider the various inputs and costs that go into bringing services to market. They often point at basic ingredient prices and say that a burrito shouldn’t cost 20 dollars. What they overlook are wages, payroll taxes, sales tax, insurance, and, most importantly, the need for a return on investment, which is what incentivizes providers to offer those services in the first place.
Finally, the very term “price gouging” implies coercion and that customers are somehow compelled to pay certain prices. That is simply not the case when it comes to eating out. Anyone who feels “scammed” by a restaurant bill can stay home and cook instead, which is significantly cheaper than eating out. Lasagna, for example, is usually about six times as expensive at a restaurant as it is to make at home.
Prices are not moral judgments, but rather, they are signals that coordinate scarce resources. Instead of playing the victim card, critics would be better off by understanding how price discovery actually works and appreciating the fact that we have a system that enables them to eat out at all, regardless of whether it’s become more expensive.
