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
Fast food companies, give you a “deal” when you use the app which is really just what they were charging a few years ago or probably a bit more. They know who you are, what you bought and exactly when you bought it. Sure the restaurants don’t make quite as much but they’re gathering information which can be sold and used to keep you coming back. Anyone who doesn’t order on the app pays significantly more than they should so it’s likely the fast food companies aren’t losing any money by giving up users lower prices.
The real reason: Price discrimination. They make more money overall by making the people who are willing to pay more or value time/convenience higher than the friction of using the app pay more, but keep the more price sensitive customers by offering coupons or discounts from ordering in the app. It’s the same reason why last minute airline tickets are typically much more expensive than advance purchase tickets. Setting a single price leaves a lot of money on the table.
The other reasons they want to drive people to app ordering are real, but they’re just the cherry on top.
The „deals“ in the app are the „normal“ price, they still make a profit. The price on the menu is just jacked up for an even bigger margin. Most people that just randomly go to the fast food place are too lazy to download the app. Its free extra profit, anyone that goes regularly will use the app, but all the random people that go because they just want some food right now get ripped off.
It’s the same as sending coupons to every house except it easier to use them. They are still making money on those deals, but the customer gets to feel like they are getting a bargain and is more likely to come back. I have a bunch of fast food apps on my phone. When I’m too tired to make a meal and I open the food tab on my phone I’m going to open the app with the best deals first. Same with loyalty points. People feel like they’ve earned those deals and want to use them like it’s burning a hole in their pocket.
Several ways.
1. They can access various user data and sell it.
2. Orders can be scheduled by their listed pick up time, reducing the amount of staff it takes it keep up with peak demand. Less employees the better.
3. You don’t have to dedicate an employee to taking orders, instead they can float back and handle drinks & drive through. Less employees the better.
4. Increased order accuracy and customer accountability for order inaccuracy. This means less free replacement food for errors.
5. Overstock management. It cost money to purchase & transport the food on the verge of expiring. And being thrown in the trash is a 100% loss. However you can simply offer a special deal to push increased sales.
6. They can generally afford selling it at those prices, but it cuts into profits and risk management if they do. Like Sonic’s half-price drinks, they cost pennies to supply but charge several dollars for each.
1) installing someone else’s code or app on your device gives that app (and its bugs/flaws/intentional features) access to a lot of possible information about you, and your activities. That information is more valuable.
2) the introductory/early adoption period of most tech stuff is run at a loss and subsidized by capital.
3) it doesnt cost very much to give you fast food. Esp. soda. You could get a gallon of soda for a quarter, the profit margin is huge.
4) the companies are betting on being able to learn and influence your behavior via notifications, prompts, sales, etc.
Having a little button on the screen you use all day makes it a lot more likely you’ll get your next meal from them
If you care enough to download and use the app, you’re already the kind of customer mcD’s or any fast food wants. A “””savvy””” repeat consumer that wants their food
Simple, it gives increased efficiencies in the restaurant as you don’t have so many people queueing for a cashier.
It also increases repeat business. If you earn reward points by using the app that can be redeemed for food then it’ll encourage you to buy more per visit and visit more often.
I currently have enough points in the McDonalds app for a double quarter pounder with cheese.
And then finally you have access to notifications. Being able to send notifications advertising your latest promotions is priceless.
I’d look for the answer in the terms and conditions of the app. It tracks everywhere you go (so it can know when you’re in the drive thru) and listens to everything you say, your search history, conversations, literally everything. Sell that data!
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