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Showing posts from 2009

Year in Review

It was a pretty good year for me in the blogosphere. I managed to publish over 270 posts here at Extraordinary Observations, I blogged for Newsweek's Generation O over the summer, and I wrote a handful of guest posts around the internet.

Just in case you missed anything or started reading in the middle of the year, I compiled a few of my favorite posts from 2009 (organized by topic). Here's to a new decade of great blogging!

Everyday Observations
Casino ATM Puzzles - Las Vegas casinos charge a seemingly absurd fee to withdraw cash from their ATMs; but there might be a perfectly reasonable explanation for it.Coffee Shop Squatters - I write a lot of blog posts from my favorite coffee shop and I do it because the coffee shop is very accommodating. I'm skeptical of the claim that coffee shop squatters are actually bad for business.Why Are Beer Companies So Green? - for whatever reason, it seems like beer producers are among the most environmentally friendly businesses in the econ…

Transit Lessons from Las Vegas

Metropolis Magazine has a very cool article about the mostly unknown history of the Las Vegas Monorail. After my Vegas visit last spring, I wrote about the monorail as a huge missed opportunity on the strip. It seems like the article's author, Karrie Jacobs, agrees.

(from flickr user http2007)

Despite its shortcomings, there are a few things about the Monorail that seem relevant in light of the public transit crisis facing cities across America. Specifically:
The LV Monorail makes money.The LV Monorail is privately owned.The LV Monorail is completely driver-less.For the most part, no other transit system in America can be described by all three points (or even two of them).

On the first point, it's important to keep in mind that LV Monorail fares are high, very high. A single ride costs $5 and an all-day pass runs $13. That's at least a 100% price-premium over most American transit systems. But plenty of people still pay. That's the beauty of doing business in Vegas. When…

Airborne Deterrence

There’s bit a bit of editorializing about the risk posed of airplane attacks and a few probability statistics thrown into the mix. Predictably, the federal government amped up its ‘security’ at airports and politicians have made empty statements about the importance of such measures.

(from flickr user emptyhighway)

Ultimately, if another attack along the lines of September 11th never happens, it won’t be because of the visible presence of ‘security’ at airports, it will be because of the deterrent effect that comes from the expectation of such an attack. Here’s a quote from an Associated Press article yesterday:
Passengers aren't only responding to obvious acts of terror. In June, two off-duty officers handcuffed a traveler who took off his clothes and kicked and punched a flight attendant on a US Airways flight to Los Angeles from Charlotte, North Carolina. In April 2008, passengers duct-taped a drunken man to his seat after he attacked a United Airlines flight attendant on a trip t…

Planes, Trains, and Automobiles: How Amtrak Saved Christmas

Today’s guest post is written by Emily Richardson. Emily is a young professional and marketing expert for a major airline. She lives in Dallas, Texas. The opinions expressed below are exclusively her own. -Rob

When it comes to travel, I'm spoiled. For three years now, I've worked for the best little airline in the country and I love it! I completely take for granted that I can wake up on a Saturday morning and decide to spend the night in Vegas, New Orleans, Chicago, Los Angeles... I can have my pick of over sixty fabulous destinations on a whim. I can't wrap my mind around planning a trip in advance. I just check the schedule and go!

I've been very lucky in my travels that weather and other acts of God haven't affected my plans. It was bound to happen though, and it did on Christmas Eve. I was happily on my way to the airport on the morning of December 24th. My gifts were wrapped and my cards were signed. I was ready to celebrate with my family as we do every year…

Book Reviews

Back in January I guessed that I would read about fifty books in 2009. That was actually a pretty accurate prediction. You can check out my Shelfari profile for the full list, and here are some thoughts on my six favorites (not all of these were published in 2009, I just got around to reading them in 2009), in no particular order:

The Shock Doctrine by Naomi Klein - You don't have to be interested in economics to find this book fascinating. It's an in-depth criticism of Chicago School economics, Milton Friedman, Jeffrey Sachs, and the concept of economic 'shock therapy'. Klein explores the historic significance of transition economies in a depth that most sources on this question fail to wrestle with. The Shock Doctrine is extremely well-researched and reads smoothly the whole way through.





Traffic by Tom Vanderbilt - I never would have expected to enjoy a book with the subtitle "Why We Drive the Way We Do (and What It Says About Us)", given my feelings about ca…

In Defense of Gift Cards

Today is Christmas, so it seemed appropriate to write a post about Christmas gifts, specifically giftcards. Giftcards are big business, but they've developed a bad reputation. Take this rant by Barry Ritholz, for example:
Nothing says “I am both thoughtless and inconveniencing” like a gift card. They let the recipient know that you couldn’t be bothered actually picking out a present, so here is a cash equivalent — only so much less convenient than the crisp paper kind of cash. And, you can only spend it in one place.How much do gift cards suck? Each year, $5 billion in gift cards go unclaimed, forgotten about or lost. That’s how much people value them — they throw away $5 effen billion dollars worth every year! They are an expensive and inefficient way to say “I feel obligated to get you something, but don’t know what.”In some cases, Ritholz is right. If someone gave me a giftcard to a business where I had zero interest in being a customer, I might put the card in a drawer and forg…

Police and PR Problems

Ed Morrison writes that some suburban police around Cleveland have developed a bad reputation for their strict enforcement of traffic and parking laws. Apparently all it takes is one or two parking tickets or moving violations for people to feel utter resentment for the place where they received them?

As I've written before, this is at least partially the product of car-culture. There are many otherwise model citizens who become lawbreakers only once they get behind the wheel of a car. Before long people begin to develop a sort of Pavlovian conditioning to the sight of a police car. They tense up and cringe at the thought of getting "busted by the cops" in presumably a similar way that a smash-and-grab crook would feel if some officers walked into the store he was about to rob.

(from flickr user KCIvey)

I'd be thrilled if the suburb in question moved some of its police to foot patrol or bike patrol. Both pedestrian cops and bike cops have the deterrent effect that is he…

What's Wrong with Wall Street?

Everyone seems to have an opinion on this topic. What I don't like about many of the 'what's wrong with Wall Street' articles these days is that they're written from a backward-looking perspective and in the context of the financial crisis. What would be great is if someone had explained everything that's wrong with Wall Street before any of this happened.

Fortunately, someone did. Two guys, actually. I don't know how I've missed this book over the years, but Monkey Business by John Rolfe and Peter Troob seems to have slipped under my radar. If you have any curiosity about how screwed up the world of investment banking is, or need any justification to steer away from it as a career path, this is your book.

As far as the writing goes, it's a memoir written by two authors who tell their stories independently. Each author's work appears in its own font, although the progression is logical and well-connected. It's a quick and easy-read. The langua…

More on Internet Gambling

CNBC aired a pretty good special about illegal gambling last week (I don't think you can watch online, but it's worth checking out if nothing else is on TV).

(from flickr user heipmann)

As I've written before, internet gambling has a distinct edge over brick-and-mortar operations because it has lower operating costs and can offer lower fees, vigs and commissions and a wider variety of betting options. It's the reason why professional sports gamblers, even if they live right next to a casino in Nevada, still make illegal bets online. Even if casino gambling became fully legal in all 50 states, it wouldn't eliminate the demand for online bets.

The Downtown Parking Fallacy

Via CEOs for Cities, the Hartford Courant tells a sad story of what's happened to their downtown in the past few decades.
Since 1960, the number of parking spaces in downtown Hartford increased by more that 300 percent — from 15,000 to 46,000 spaces. This change has had a profound and devastating effect on the structure and function of the city... as one historic building after another was demolished.And what did the city gain from this assiduous drive to provide sufficient parking? Was it able to grow more prosperous by providing more jobs and housing for more people? If this was the desired outcome, we can consider the past 50 years to have been an abysmal failure. Over the period that parking was being increased by more than 300 percent, downtown was losing more than 60 percent of its residential population, and the city as a whole lost 40,000 people and 7,000 jobs.The question is: what sparked all of this? At some point in time, there must have been a demand for downtown parkin…

In Defense of Suburbia

I don't have one, but Canada's National Post recently ran a 3-part series (part one, two, and three) defending the virtues of suburbia. Each article begins with this:
Lampooned in movies, TV and books, the suburbs have always been maligned, but is it as bad as urbanites think? In this last of a three-part series, Post Homes looks at how a community can create contentment.Maybe it's true in Canada (or the imaginations of the conservatives who publish the National Post)?.. It's a stretch to say that suburbs in the U.S. have always been maligned. Actually, I like these articles, not because I necessarily agree with the content, but because it means people are actually starting to defend the position that suburbs are great, rather than simply accept it as a fact of life.

(from flickr user Dean Terry)

On a related note, I've never really enjoyed news stories about people who take "car-free" challenges and such. While it's nice to have evidence that it can be …

Drive-Thru Culture

Tom Vanderbilt has a nice article in Slate about the business and culture of drive-throughs.

It's been quite a while since I've used a drive-through (possibly because I don't frequent a lot of businesses that have them). I think the article makes a few potentially misleading claims about drive-throughs, nevertheless. Vanderbilt notes that McDonald's does about 65% of its sales through the drive-through window; and that the company once demolished a store in California when the local government used an ordinance banning drive-throughs to prevent a remodeled McDonalds from having one. Stories like this might lead you to believe that drive-throughs are universally necessary for the success of fast-food.

Not every McDonald's has a drive-through. I don't think any food-court location has one, nor do some McDonald's stores in urban areas where retail space is limited. And don't forget the walk-up window I spotted at a McDonald's in Manhattan over the summer…

Enough with the Pity

I suspected that bike commuting in the winter would have its challenges, but the challenges have turned out to be a bit different than I anticipated.

(from flickr user Antony Pranata)

The cold isn't so much a big deal. Strong winds have been challenging, though. I think the worst part, however, has been dealing with the people who feel the need to comment about how awful it must be that I'm riding a bike in the winter.

I first noticed this back in October. It was about 45 degrees in the morning - a great temperature for riding, as it turns out. While I was locking my bike up in front of the building I was going into, a woman on her way to work stopped and mentioned "how cold I must have been on my ride". Now that the temperature has gotten really cold, it's not even worth mentioning that I rode my bike to wherever I am. I really do not need the pity.

Value of a Degree

Time has an interesting piece about the cost and value of a college degree.

(from flickr user tantrum_dan)

There are two notable points made in article. First, this quote from Marty Nemko:
Marty Nemko, a career and education expert who has taught at U.C. Berkeley's Graduate School of Education, contends that the overflow in degree holders is the result of many weaker students attending colleges when other options may have served them better. "There is tremendous pressure to push kids through," he says, adding that as a result, too many students who aren't skilled become degree holders, promoting a perception among employers that higher education doesn't work. "That piece of paper no longer means very much, and employers know that," says Nemko. "Everybody's got it, so it's watered down.To some extent, the system is broken. Last week I wrote about people who self-select courses and professors not because they want to learn something or take awa…

What's Really Happening on Euclid

There has been talk of revitalizing Cleveland's Euclid Avenue for as long as I can remember. It took a while, and now it's been about a year since the big transit project itself has been officially considered "complete". Hows it turning out? Depends who you ask... Michelle Jarboe's recent front-page Plain Dealer article points to $3.3 billion in new investment along the corridor as evidence of forward progress. Roldo counters that such logic is post hoc ergo propter hoc and that most of the $3.3 billion in development was inevitable, without or without the transit development.

(from Wikipedia)

Before I go on, let's back up a bit. Last year I wrote that the Healthline represents a big missed opportunity in Cleveland. Instead of routing the BRT into East Cleveland, project planners should have continued the line from University Circle into Cleveland Heights. Instead, we have redundant transit service in East Cleveland (which is served by both the Healthline and t…

Holy Grail of Sports Betting

Last Sunday 60 Minutes did a story about Tim Donaghy and the 2007 NBA betting scandal.



What I find most interesting is the idea that an enterprising sports gambler could generate an edge simply by studying the referees. Most books written on this topic focus on player and team statistics and suggest means to calculate a winner based on performance data. The problem is that such a model assumes that referees are all the same and there really isn't such a thing as fair and unfair outcomes. If what Donaghy says is true, then simply studying the refs might be enough to make a killing on these games.

Corporate Brand Coverups

Last week I made a big deal about the fact that Starbucks is opening stores disguised as an independently-owned businesses. The reality is that this isn't a new phenomenon; but it does seem to differ by industry.

When it comes to branding, it's often said that the key is consistency. An example I hear often goes like this: you're on a cross-country road trip, driving through a state you've never visited, and you're hungry. You pull off the interstate and approach two buildings. On the left is a McDonalds. On the right is a "Bob's Burger Shack" which also sells cheap greasy burgers and fries. In this case, most people will opt for McDonalds. Not necessarily because the food is good or because Bob's food is bad; but because McDonald's is consistent. It's tolerable. It's low-risk.

Last weekend I ate at Fat Head's, a brewpub in suburban Cleveland. They do a pretty good job of hiding the fact that the brand originally comes from Pittsburg…

Who's Unemployed?

Mint has this nice little satire cartoon about the intricacies of the unemployment rate.



This helps explain, first of all, how news from last week can claim a net-loss of jobs and simultaneously a net-decrease in the unemployment rate.

I took a microeconomics course right around the beginning of the crisis, and one topic that often came up for debate was whether a person was unemployed, given some specific context. Consider, if someone graduates from college but the next day don't have a job, are they unemployed? What about a month afterward? The answer is certainly a lot less straightforward than you'd think.

On Grade Inflation

This is about my least favorite time of the year, mostly because it's hard to go anywhere on a university campus without being around some of the most anxious individuals alive. People become obsessed with grades, some willing to go to great lengths to avoid the grade that probably reflects the level of work they've put into the course over the past few months.

(from flickr user ccarlstead)

It's generally accepted that grade inflation exists. A distribution of GPAs at many colleges in America would be highly skewed and probably wouldn't look much like a normal distribution. To an extent that's the result of the fact that students who do poorly are more likely to drop out and students who do well are likely to remain. But even controlling for that, I think its reasonable to say that the typical GPA today is higher than it was a generation ago.

There's a second type of grade inflation that I think has significant implications. Earlier this year I wrote a post called…

Brand Management

Jon Cook has an interesting post up at Reuters about the extent to which Starbucks is going to open new stores that people aren't supposed to know are owned by Starbucks. He calls it a "brand crisis" - I'd say that's pretty accurate.

(from flickr user ๛Abdulrahman`ρнσт σgяαρнєя` )

I've been known to be fairly hostile toward corporate chain businesses. I try to avoid them whenever possible, but I think people get confused about why I feel this way. It's not that I dislike corporate chains simply because they are chains, I dislike them because they typically sell a good or service that's worse than an easily available alternative.

Starbucks is a great example. There are two reasons I would patronize a Starbucks: 1) I am meeting someone there and it's in a convenient location or 2) I'm at an airport, it's 5am and nothing else is open. I can get stronger and better-tasting at my favorite coffee shop. If Starbucks opened a new store in my neighbo…

Distance, Not Time

Colby left this comment earlier in the week:
I've seen somewhere else a comment about thinking in terms of distance instead of time. Can you explain the benefit or reason for such an approach? Whenever I ask 'How far?', I don't really care about the distance - and when I receive the answer 'XX miles', I do the calculation in my head to determine the time it would take to travel. Thanks.Good question. I think there are a few reasons why measuring distance in time is less than ideal.

(from flickr user theevilmightyf)

I think what gets on my nerves is that time can only give you, at best, an approximation of how far away something is, whereas distance is precise. If someone asks me how far I live from campus, I could say 1.5 miles, or I could say 10 minutes. In fact, I could also say 8 minutes. See, when I ride my bike to campus, it's all uphill, and takes a bit longer than the ride home, which is all downhill. That's a 20% time discrepancy; but the distance…

Movie Pricing

Nicholas Tabarrok had some interesting thoughts about movie industry pricing recently at Marginal Revolution. He points out that all movies at a given theater are priced the same, regardless of the demand for the individual films. I was reminded of this while sitting in a movie theater last Friday night that was at least 80% vacant. I was seeing the 10pm showing of The Messenger, so I paid the full price of $9. I don't know how many people were seeing the other movies that night, but presumably the "main feature" sold the most tickets.

(from flickr user Kevin H.)

Ideally, the theater manager would price the movies such that every customer pays the most they would be willing and every showing sells out. Consider this: if the theater where I saw The Messenger has a capacity of 100, and the manager sold 20 tickets for $9 each, she brought in $180 in revenue; but had she charged only $2 per ticket and sold out the theater, she would have brought in $200, plus she would have go…

Not the Point of High Speed Rail

Track Twenty-Nine draws my attention to this article about South Bend, Indiana's lobbying for a stop along a proposed high speed rail corridor. One thing concerns me, though:
If the federal government approves funding for a high-speed rail line through South Bend, passengers here could travel to Chicago's Union Station in just one hour. Such a project would have a profound effect on life in South Bend, making it easier for residents to commute to jobs in the Windy City, local officials say.There are a lot of good reasons to invest in high speed rail infrastructure. Extreme commuting isn't one of them. Now, this article doesn't specify that people would use this for their daily commute, but there are reasons to think that's the case.

(from flickr user satosphere)

I've heard this argument applied elsewhere. While recently discussing the 3-C Corridor in Ohio, someone said, "wouldn't it be great if we had high-speed rail here?.. you could live in Cleveland an…

24 Hour Cities

This American Life is probably one of the best programs on public radio. Yesterday's new episode is one of my favorite yet - five stories that all take place in the middle of the night. Download it on your iPod, listen to it at work, while you jog or whatever. If you haven't heard the show before, it's worth at least an hour of your time.

(from flickr user CC Chapman)

I get frustrated at times when I'm having a good night of writing, the clock strikes 10:00 and I have to leave my favorite coffee shop. There really aren't many other places to go at that hour in my neighborhood. Once things close for the night, they're closed for the night.

Recently I was in one of the more "happening" parts of downtown on a Tuesday night. The streets were dead. The person I was with commented that I shouldn't expect much and if I came back on Friday or Saturday night the neighborhood would be hopping. Regardless, that isn't what makes for a great 24-hour city.

A gr…

Thinking About Transportation

Aaron Naparstek of Streetsblog says it best in this interview with PBS's Blueprint America.



The most interesting point comes at the end, when Naparstek notes that livable streets have become perceived as elitist, which is a actually a big problem. In a sense, they are elitist - they're very expensive. You have to have a lot of money to comfortably live in them. I can relate, because I don't have a career and I don't have much income at the moment. There's nothing I could appreciate more than more affordable urban communities; but with such a small supply, of course the prices are going to get bid up by the people who really want to be there.

Another Black Friday for the Books

I don't have a crazy video this year, as it seems the Black Friday crowds have been behaving a bit less like animals this year than historically (see my posts from 2008, 2007, and 2006 if you're interested in that) but I still have a few comments. Take this article from my local paper that I woke up to this morning:
As it neared 5 a.m. this morning, a line of 100 or more Best Buy shoppers wrapped around the store at Steelyard Commons. Several people had camped out overnight, including Ronnie Bolanos of Cleveland. He said he came out last year, and ended up being too late to take advantage of deals on a limited quantity of items. He wasn't going to let that happen again: This year he showed up at 7 a.m. on Thanksgiving, meaning he spent almost 24 hours outside the store.It's more than just waiting patiently for 24 hours... it's spending an entire holiday at a big-box shopping plaza. It's spending it out in the cold and in the rain and the snow.

The popularity of t…

Boomerang Kids

The Associated Press is running a story about "boomerang kids" that's been getting some attention around the blogosphere. There's no doubt that more college grads are living with their parents than in the past, but to pin it entirely on the recession misses other important points.

College was a lot less expensive in the early 80s, the last time unemployment was as high as it is today; and college grads carried a lot less debt back then too.

There's also the cultural aspect, which exacerbates the problem. What 18 year old isn't anxious to leave home and go live on their own, no matter the cost? Plenty of teenagers choose to go to a college far away from where they live, others go to school in their hometowns. Almost none of them wants to live with their parents. But living away at college is actually very expensive. In the neighborhood where I go to school, the typical rent is about $400-$500 (depending on the number of roommates and quality of the housing and s…

Boycott Happy

The LA Times has an interesting story about the American Family Association being up-in-arms about corporations not using the word "Christmas" in their holiday advertisements. This year, they're calling for a boycott of Gap and its brands on these grounds.



It's a pretty bad commercial, but if you watched it, you'll notice Gap actually does use the word Christmas. It's almost as if the American Family Association has a pile of pre-written forms, they merely fill in the name of the (presumably) offending company and the rest is magic. Sometimes if I wonder if these organizations actually don't want what they're demanding, because, once they get it, what do they have to make noise about anymore?

Taxi Cab Payments

Daniel thinks taxi drivers are missing out on some business by refusing to accept credit and debit cards, even though they are required by law to do so. I think this is an instance in which mandating that all cab drivers accept plastic payments leads to unintended consequences.

(from flickr user sunface13)

I understand why cab drivers don't want to accept credit or debit cards. Cash isn't subject to a "processing fee" - an amount that can be significant, particularly for small fares, like those under $10 or $15. Cash is also better when it comes to tips. People paying with cash often round tips up, especially if they need change. People paying with plastic often calculate an exact percentage tip. Not to mention that cash tips are easy for cabbies to hide from the tax man..

It seems like, if credit and debit fares were truly valuable, some cabbies would willingly exploit that market. They could put big stickers on the side of the car or a sign on top so potential custome…

Don't Tax College

Hard for cash, Pittsburgh's mayor wants to establish a new 1% tax on gross college tuition paid by students. It's an awful idea for generating revenue; but unfortunately, Pittsburgh might be able to pull it off without immediate negative consequences.

(from flickr user Niemster)

College has already gotten so expensive to the point that a lot of students now simply roll their eyes and accept these things as another cost of the college experience. At the beginning of every semester, universities bill students for tuition, and then they tack on a bunch of seemingly arbitrary fees and surcharges. Many schools ask for a few hundred bucks for a parking space. Textbooks can be a hundred bucks or more each. When it's all over, it's actually not that difficult to ask students to fork over another few hundred bucks, and they'll do it, because the sticker shock will be long gone and they're numb to the fact that these are large amounts of money.

With any tax, the big risk is…

Popcorn Subsidies

Consider this for a moment: if you go to see a movie this Saturday night, the ticket will probably cost between $8 and $10; if you want a bucket of popcorn, you'll probably pay at least another $5 for the salty snack. On the other hand, one of my favorite bars has a popcorn machine, just like at the movies, and if you go into there this Saturday night, you can eat as much popcorn as you'd like, and it's free!

(from flickr user Justinsanity)

Popcorn at the movies is the quintessential "pricing puzzle". Everyone wants to know why it costs to much to buy something that they know costs almost nothing to produce. Further, how does the bar get away with passing out free popcorn while the movie theater charges an obviously inflated price?

The answer is that in both cases popcorn is being used as part of a cross-subsidy. In the case of the movie theater, popcorn is subsidizing the ticket cost; but in the case of the bar, popcorn is being subsidized by beer and other drinks.

Saturday Satire

I don't know what it is about satire that pokes fun of big-shot Washington lobbyists, but it just seems to easy to come up with good material. Thank You For Smoking, for example - hilarious. Now Streetsfilms has this short video featuring Veronica Moss, lobbyist for the Automobile User Trade Organization.



My favorite line: "This is not Italy. This is not... a piazza!"

Dealing with Palin

Andrew Sullivan writes:
This is only the second time in its nearly ten-year history that the Dish has gone silent. The reason now is the same as the reason then. When dealing with a delusional fantasist like Sarah Palin, it takes time to absorb and make sense of the various competing narratives that she tells about her life. There are so many fabrications and delusions in the book, mixed in with facts, that just making sense of it - and comparing it with objective reality as we know it, and the subjective reality she has previously provided - is a bewildering task. She is a deeply disturbed person which makes this work of fiction and fact all the more challenging to read. And the fact that she is now the leader of the Republican party and a potential presidential candidate, makes this process of deconstruction an important civil responsibility. We take this seriously as we always have. We want to be fair to her, and to her family, and to the innocent people she has brought into the spo…

Towpath Trail Review

I biked it about a week and a half ago, from Cleveland (about mile marker 5) to Peninsula (about mile marker 24 or 25) and back. My overall impression is that the Towpath a nice resource for recreational purposes, but it's difficult to imagine it evolving into a solid network that bike commuters can realistically use to get around.

(from flickr user jacobgutierrezflores)

The ride itself, along the trail, is very nice; but there are a few things that I thought could be better.

First, it's very challenging to get in and out of the Cuyahoga Valley. This is problematic because there really isn't much down in the valley, and many people come from an area of a significantly higher elevation. I think the elevation change is about 500 feet from the Towpath to many of the surrounding areas. And while this isn't necessarily the most ridiculous hill in the world, it is very challenging for those who aren't in the best of shape (considering I rode over 50 miles on the trip, I lik…

Fast Food Loss Leaders

Marketplace had a pretty interesting story last week about the economics of the McDonald's dollar menu, and how it's squeezing profitability for a lot of store franchisees.



I haven't been into a McDonald's in a long time, so I can't speak from experience, but it seems like one major problem is that it's difficult for McDonald's to effectively utilize loss-leaders if a lot of people are simply buying things off of the dollar menu and nothing else. Back when I was in high school, I recall regularly going into Wendy's and picking items off of the value menu and never buying any of the more expensive items.

This is different than if my favorite bar offers a burger and beer for five bucks on a certain night of the week. In that case, the bar only needs to sell about one regularly priced drink to make up for (and possibly even profit) from the deal. And based on my experience, that's usually not a difficult goal to achieve.