I bought fast food for a group of people last night. The menu pricing was significantly higher than ordering through the app, which also allowed me to attach a digital coupon.
The pricing within the app is what I would expect to pay, or what I believe is “fair” or “reasonable” for chicken nuggets, French fries, and cheeseburgers.
On the other hand, I have cut my fast food consumption by at least half over the last few years because the published menu prices have skyrocketed.
What possible benefit would a fast food restaurant derive from publishing high prices to the casual customer and drastically reducing them within the app?
They have to be realizing a net loss of customers with this model, right?
In: Economics
I assume you mean in-store menu pricing, yes?
If that’s the case here’s how it works:
1. If you’re already in the store, you’re very likely to purchase there anyway – it’s a hassle to have to go to an app and do it there when there’s a giant touch screen right there (or a person taking your order), and your food being prioritized over deliveries or pickups. So they get more money off you anyway.
2. When you use the app, they lose a little on the margins, but gain so much more as a result – you are now much more likely to be a repeat customer.
Consider this: you go to a store, see that the prices are really high, you eat and try not to eat there again because it’s expensive.
You go to the app, see the prices are reasonable, and you even get discounts! Now you feel like you’re not getting ripped off and maybe you’ll have another meal from them next time.
What’s a $15 meal sold once when they can get at least five $10 meals from you?
3. The app means they can “talk” to you. Armed with the illusion of affordability, they can now keep reminding you of these deals with your notifications.
“TGIF, have a treat with us, use this deal.” Then maybe you invite yo it work friends for a quick fast food snack. They win.
“It’s your birthday! Have a free soft serve on us!” Well, you’re already in the app and you don’t want some poor dude to ride all the way to your apartment to deliver one melted ice cream and tip him for basically nothing, so you grab a burger as well. They win.
“15% off on all chicken sandwiches this week!” And you think, well I do plan to have a chicken sandwich this week, might as well take advantage of this promo. They win.
4. Apps are easier. In today’s world everything is just a click away. An app takes away that friction of having to go to a store and talk to a person and sit and wait just to get food. Especially these days when there are a lot of people who go grew up on instant messaging and the internet and have anxiety talking to people or find the existence of in-store touch screens weird and anachronistic. Instant access to food means they are at a better top of mind position among their customers.
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