Teachable Moment: A Toronto McDonald’s fan surveyed McMenu prices across the city and was shock-ed to find significant differences. I thought, ‘Here’s a good opportunity to explain why fast food joints price items differently at different locations…
Contemporary McDonald’s Drive-Thru Menu: Dozens of items, hundreds of variations…
What they said…
The Redditor in question, who goes by the handle ‘Agitated_Data2270’, wrote: “Lately I’d noticed that I paid more for a McFlurry at Union Station than near my home.”
That discovery triggered what can only be called a mammoth (for a lone researcher) survey of 11 McDonald’s locations spread out across Toronto, revealing the at times shocking variances in prices for 18 popular menu items.
What they did
“After [a chatbot] confirmed that pricing was no longer meant to be consistent across locations[,] as I felt I remembered it being long ago[,] I started to compare prices for a variety of items in McDonald’s app for pickup by changing the location and going through the menu. ”
What they found
“Some items are tightly fixed across the city but others show 20 or 30 percent price ranges. Double cheeseburgers seem to be targeted with the highest combo upgrade costs,” the poster added.
“What surprised me when I did this wasn’t that some locations were more expensive overall, it was that different items are cheaper or more expensive at different locations and even the cost to make something into a meal varies within a location depending on what you are adding to.”
Their takeaway
“I just kinda fell down my own little rabbit hole investigating the pricing policies of McDonald’s,” Agitated Data2270 admitted. “It’s not an exhaustive survey, but I tried to include a variety of neigh-borhoods and some just outside Toronto proper […] The patterns were consistent (or inconsistent) enough that I thought it was worth sharing…”
What the industry says…
We’ve noted a number of times lately in our posts – and frequently in our Fast Food Week vignettes – that, “prices may vary depending on where you live.”
Our experience has been that most if not all Fast Food brands are now leaving actual menu board pricing up to individual franchisees or managers. There are a number reasons for what many con-sumers see as a major and unreasonable change from ‘the old days’.
Transportation costs
It costs more to deliver head office-mandated food and packaging products to places such as Hawaii and Alaska. Hence, higher prices to cover the cost.
Location costs
These include a long lost of monthly and annual ‘bills’ including: rent/mortgage, property taxes, in-surance, maintenance, utilities, marketing, franchise fees. These ‘costs of doing business’ can vary widely from municipality to municipality.
Labour costs
Many Fast Food jobs pay minimum wage, or sightly higher. The US nationally-mandated minimum wage is currently $7.25 per ghour. But a numger of individual states have raised their miniomums as high as $16, with escalators built in that will soon raise their minimums to $20 or more. Still, there are some states, notably Louisiana, where the minimum wage for tippable workers is as low as $$2.23 per hour.
Competitive pricing
As noted above, most Fast Food franchisees are now allowed to set their own menu prices, depend-ing on their own cost/profit profile. With intense competition, crowded markets and customers staying away due to high prices, McD’s operators are keeping a eagle eye on their menu prices and tightening their operating-budget belts as much as possible.
‘What the Market will bear’
Franchisees and managers may set their prices according to what the local competition is charging for similar items. Everybody wants to be at least equal to or lower than the competition.
But then, there’s the other side of the coin. If there’s no competition – for instance, if your resto is at a freeway service centre stop, a theme park or in a Walmart – there’s no competition. You can set your prices as high as the market will bear.
My take
I remember the old days, too. Not so long ago (in my personal experience, anyway) all McDonald’s locations charged the same prices. That, together with identical menus wherever you stopped along your way provided diners a comfort zone, of sorts. That’s one of the ‘intangible’ factors that help build customer loyalty
But things have changed massively since food prices started to sky-rocket and COVID cut its swathe across civilization. many, many small, one-off, mom-and-pop restaurants have closed because they simply can’t make a profit any more. The truth is, some Fast Food operators are also struggling to stay in business. For them, being able to set their prices according to their particular market conditions is crucial to their very survival.
~ Maggie J.