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
The person reading the prices off of the menu are already in the restaurant. The chance that they are put off by a higher price and eat elsewhere is very slim since they’re already in the building.
The app exists to coerce people deciding where to eat to go to their chain. So they give you lower rates to bring you in the door. The apps really target high-frequency customers. Fast food restaurants make most of their money off of a relatively small percentage of their clients who go there a lot. A customer who goes to McDonals twice a week is exponentially more valuable to the company than an occasional customer. The goal of the app is to target customers with a high propensity to go to the chain of giving them just a little push to increase the frequency of them going. If you get them to go one more time a week because of a “great deal”, it’s well worth giving them discounts on single items.
The fact is, certain fast food items work off huge profit margins regardless of if it’s the discounted app price or not. Remember when McDonalds had their $1 fountain drink promotions for years? Yeah it’s costs them like 3 cents to sell you a fountain drink. $1 was still a massive margin. They’re happy to nearly break-even on a sandwich if that gets you in the door because they know 90% of people will get a combo and the fries and soda are almost pure profit.
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