The Economics of Fries (and Burgers) - Chicagoland Sportbikes
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post #1 of 12 (permalink) Old 04-09-2003, 02:31 AM Thread Starter
 
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The Economics of Fries (and Burgers)

I was standing in an extremely long line at McDonalds last week, when in my boredom I started to notice some very unnerving. I wasnít that hungry, so I was just going to get a cheeseburger, price $.89. I look over at the $0.99 menu, and see that I can double my meat (no pun intended) for another $0.10. This lead to the thought that if a patty of beef (or what we think is beef) is only $0.10, then the cheese and buns must be fairly inexpensive also. Upon my further investigations, I found that difference in price between a standard hamburger and a cheeseburger is only $0.10 also. Yet it is upped to a Quarter when you go with a Quarter Pounder.

Something even stranger is happening if you carefully analyze the Happy Meals. There you can get a hamburger Happy Meal for $1.99, but if you little bundle of joy wants cheese with that, itís going to cost you another $0.30. Now that same piece of cheese that is costing $0.10 on a regular hamburger is $0.30 for you children. I attribute this increase to being caused by lacing the cheese with addictive drugs, much like the tobacco industry had done.

These occurrences donít stop with the hamburgers; even the chicken nuggets are not immune. At your local McDonalds, you can get six chicken nuggets for $1.99, nine nuggets for $2.99, and twenty nuggets for $4.19. For the first increase of three nuggets, it cost $1.00, and yet for the second increase, which more than doubles the amount from the second increase will only cost you another $1.20. The only rational explanation for this is that McDonalds has figured out how to do an exponential volume discount, and make it profitable.

I was then going to get started on fries, but it was my turn to place my order. Perhaps the next time Iím in line, Iíll gather the needed information, and formulate even more. All I can remember, is that a small fries, cost about as much as a hamburger. I guess this is what you get when you have an $80000 college degree, and too much free time.

Mike H.
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post #2 of 12 (permalink) Old 04-09-2003, 07:54 AM
 
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Holy Crap!! How long WAS that line?!?
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post #3 of 12 (permalink) Old 04-09-2003, 08:17 AM
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You spent $80,000 on an education and no one ever taught you NOT to eat at McDonalds?

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post #4 of 12 (permalink) Old 04-09-2003, 08:47 AM
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Re: The Economics of Fries (and Burgers)

Quote:
Originally posted by ForbidnR6
...I guess this is what you get when you have an $80000 college degree, and too much free time.

Mike H.
Haven't you ever taken Consumer Education in High School? I thought it was a requirement to graduate.
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post #5 of 12 (permalink) Old 04-09-2003, 09:39 AM
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Next time you are in the LINE FROM HELL at McD's figure out the Fountain drink price dilemma and if the x-tra ice factor is in play!

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post #6 of 12 (permalink) Old 04-09-2003, 10:01 AM
freaking newbies, man there slow, ha ha ha
 
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Quote:
Originally posted by jcc_rr
You spent $80,000 on an education and no one ever taught you NOT to eat at McDonalds?
lol, that's what I was thinking. Their breakfast is the only reason I go these days. Hmmmmm.....hotcakes and sausage....now going to McDonalds before class
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post #7 of 12 (permalink) Old 04-09-2003, 10:19 AM
 
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it's interesting because the pricing for food is the exact oppoite of pricing for car and other high dollar items. All items attempt to equally cover the fixed overhead instead of covering it as a percentage. Fast food restaurants typically don't use loss leaders to get you in the door. They instead try and convince yo uto pruchase the most expensive item.... whic as you noticed does in fact onyl havea small varible increase in cost. Direct Materials is very cheap in fast food. It's direct and inderect labor that suck you dry. Overall the food is cheaper becasue they rely on low cost of materials and high volume to cover their overhead.

But look at a automobile. Durable goods typically have a loss leader. A item with a very small margin to get you looking. Then the salemen convinces you to purchase additional packages which have 200 - 1000% margin over their respective variable increase in cost. You look at the blue book and can see that Option package X costs $500... but try and offer them only $700 over the base model and they will laugh you out the door. If a dealer sold nothing but base model cars all day, they would go out of business... fotunately most comsumers are willnig to pay top dollar for convenience items because the precieved value is typically 5-10 times the actual cost. The CD player with the Infinity sure X mega duper sound system looks nice eh?.... cost them $300 more...you get hit for $5000 to get that with $500 worth of leather and some $1.25 gold emblems and $50 fog lamps.
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post #8 of 12 (permalink) Old 04-09-2003, 10:22 AM
 
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YEah... but who can beat the MCD's fries? They are still the BEST.
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post #9 of 12 (permalink) Old 04-09-2003, 10:41 AM
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Umm folks, they don't make SQUAT on the burgers. Barely covers material. They make a shitload off of fries and especially drinks. The syrup for them is dirt cheap.

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post #10 of 12 (permalink) Old 04-09-2003, 10:43 AM
 
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Funny thing about the fries is that a few years ago Burger King fries won in a taste test. I guess they taste a bit more like an actual potato and fresher, but I prefer the over salted McD's fries.
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post #11 of 12 (permalink) Old 04-09-2003, 10:47 AM
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Quote:
Originally posted by GroverSV650S

They make a shitload off of fries and especially drinks. The syrup for them is dirt cheap.
Would you like to Super Size that? Almost 100% profit.

My favorite is that a combo (non-combo really) without the drink costs more that WITH the drink. They WANT you hooked on Coke.

Dave
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post #12 of 12 (permalink) Old 04-09-2003, 10:52 AM
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i say WHO CARES!!!!
you want a burger....get a burger.
you want a cheeseburger....get a cheeseburger.
McD's isn't gonna run you into the poor house, and i *hope* you don't eat it everyday!
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