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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.

Comments

Peter said…
i ate a mcdouble and a mcchicken today and yesterday. good stuff! and cheap! add a free water. :)

i see lots of other folks doing it, too. dollar at a time. plus tax! paying with change.

one lady tonight fed herself and 3 yapping kids -- everyone had a mcdouble and seemed pretty darn happy about it.

when the recession hits, you gotta become a recessionista, and hit mackers!

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