Fast food prices have already gotten exhorbitent and they think people would be willing to pay more? McDonald’s just released a statement that they’ve pushed prices up too far and as a result are seeing declining revenues. And another wild card…as more people start using Ozempic, fewer people will eat these health destructive meals.
the threat isn’t so much “more” as “mystery.” you can plan for four fries instead of five if the cost goes from a buck to a buck and a quarter. but what if you don’t know how much it will cost?
it doesn’t matter if you can afford a baconator right now. it matters if you can afford it in line, and you may not know until you get there.
as if that’s not enough manipulation, maybe you can get a deal if you change your schedule for the local franchise.
in fact, you better plug in for those ticker updates on side prices.
this is where the owl bites the tootsie roll pop. there are so many more layers, but time is up.
The fast food conglomerates really, really, REALLY want to shut down dine-in service for good and transition drive thru to an app-only business model. It’s their #1 strategic imperative.
I would go so far as to say they don’t care about profit here and in fact they’re happy to lose quite a few customers, as long as the “percentage of orders made in app” KPI keeps going up.
> the threat isn’t so much “more” as “mystery.” you can plan for four fries instead of five if the cost goes from a buck to a buck and a quarter. but what if you don’t know how much it will cost?
i'd imagine that 1) cost difference may be but a few cents / half a dollar, something on that level. extra $0.27 across the country at lunch translates to millions later, but may not be especially noticeable to the average consumer. even a dollar or two might still fly.
and 2) going by what I'm seeing each time I'm in a Wendy's or similar, there are a non-trivial number of Skip / Uber Eats / Dash orders moving out the door. Presumably this is to tap into that credit card paying demo, esp. since in most cases they're not going to argue about 27 cents and don't have to worry about being literally short-changed at checkout.
Real red meat is roughly 85% protein and 15% fat, while fish is about 99% protein. Chicken is somewhere around 95% i think. McD "meat" is really a slurry with probably even higher levels of fat. Nothing unhealthy?
I highly recommend "Eat, Drink, and Be Healthy" from W. Willett of Harvard Medical. Mediterranean diets high in fish and vegetables are almost unquestionably healthier, and probably the healthiest diet around.
As far as I know McDonald's patties are just regular ground beef. This is also what all their advertising material in every single country they operate in says, I'd be surprised if they were lying.
Their McChicken patties and nuggets are definitely some kind of slurry though.
Similarly - look at the macros on a whopper from burger king - other than the high sodium it's a pretty well balanced meal if you skip the fries and soda.
> And another wild card…as more people start using Ozempic, fewer people will eat these health destructive meals.
So it's one of the things I think could go either way (do people do more of the thing when it becomes cheaper? or less because of appetite suppression), and it's looking more like people are about to have a whole let less junk food as price of GLP1 RAs goes down and availability goes up.
Fast food and other unhealthy food producers may about to be entering a somewhat hard time.
See also this article which is kind of an ad for Sweetgreen by Bloomberg (just tin foil hat talking there), but points a bit in the direction I mean:
I don’t know about other countries, but McD has become incredibly expensive in The Netherlands, a price that isn’t comparable to the value you get anymore. It used to be cheap, and then cheap food in return. You still get the cheap food basically, the only thing that has changed is that they’ve attempted to build a more diner-like experience. That isn’t enough to keep customers coming, if they can get better food for a similar price nearby.
You’re supposed to market this as incentivizing the consumer to come during off-hours for a discount. You can even draw a parallel to the matinee, the same concept in another industry.
Marketing anything ever as a price hike is usually a sign that marketing wasn’t properly involved in the process.
It would be less aggravating to consumers if they framed it as off-peak discounts, rather than letting it be compared to surge pricing. Eg, they'd have a list price as their max price, and they could vary the discount throughout the day..
This actually means something different. Notably its obviously a lie if your price floats up from your present baseline. People are stupid but they aren't that stupid.
They aren’t stupid but they are forgetful. There’d be a couple weeks of sharp bitterness then a low grumble, just as always happens when fast food prices get raised.
The difference is that they have large printed signs advertising the discounted prices and the times they apply (2p-5p). The posted prices are dependable as long as one checks a clock.
"Dynamic pricing is a relatively new concept in the fast-food world, with little precedent"
Yes, because they're are lots of options. You charge too much and I'll just go next door.
Isn't that what they're trying to do though? Perfectly price their product for demand at any given time? Not saying I like the idea, but it seems like pure supply and demand in action.
Yeah but it's more like the prisoner's dilemma vs. the iterated prisoner's dilemma. Some people think that what makes the modern world work is hyper-optimization, but what really makes the modern world work is reliability. If my counterparty, the hamburger stand, is trying to hyper-optimize their profit by doing dynamic pricing, now I have to run my own optimization loop to find the best value hamburger stand for that particular hour, and maybe I don't want to waste my time/energy trying to figure out what the best hamburger stand is at any given moment, so I just go to the one that charges the same prices all the time.
Wendy's doing this almost seems predatory. They know people will show up and not pay attention to the prices.
I do, however, like the idea of surge pricing for sit-down restaurants. If restaurant prices raised to guarantee available seats (like hotel rooms), there are plenty of instances where I would pay a premium to eat near an event I'm attending.
who has the attention span for that? After 1-2 times I'd just give up and default to the competitor - and Wendy's is by far my favorite fast food restaurant.
they offer made to order sandwiches at the grocery store now. hot food, too.
fast food is, well, fast, and deisgned to really hit that fat/salt/sugar creaving, but if I can't predict what it will cost me I'll head to places that will give me that promise. it's a big market and none of it is exclusive.
>Yes, because they're are lots of options. You charge too much and I'll just go next door.
Sure, but thats how all markets work. When I want a Spicy Chicken Sandwich™, I want a Spicy Chicken Sandwich™. And there are no substitutes. The whole point of this would be that Wendy's dynamically accounts for this to an acceptable degree I don't cancel altogether. People who want a cheaper meal can go elsewhere, and I can get my Spicy Chicken in a reasonable amount of time. I can honestly see this catching on as crews are blown out to the max with mobile orders these days.
A physical line has historically been a de facto surge price. You have to pay the cost of the meal plus your own opportunity cost of waiting in line. The long line is also a signal of how long your food will really take.
Mobile options almost completely eliminated that, so you have way more orders at a time than you otherwise would (or the restaurant needs a digital queue of some sort)
>Why would the way the order is made make any difference?
It's the volume. Fast food work used to come in rushes, with a volume limited by the physical location. Now for many locations it's a nonstop queue of online orders from half a dozen systems from the first minute you open to the last minute you close. Great for business terrible for humans.
It's the decision of the business to understaff relative to the expected demand in order to minimize labor costs. They could so easily have another one or two people working to make it better for everyone, they simply choose not to so they can squeeze that little extra bit of profit out.
Preceded it by many years in fast food. Algorithm-optimized minimal labor scheduling based on previous sales was being used at starbucks and mcdonalds at least in 2014, but probably earlier and probably elsewhere too.
Yes but again the intentional understaffing preceded the jump in labor costs we've seen the last few years. So regardless of how powerful the incentives are, they weren't the cause of that change.
national fast food franchises leaning in to firing customers for not being sufficiently juicy, as a means of increasing efficiency.
with a focus on the most willing consumers, you can probably even make more with fewer employees. keep crews blown out by making them smaller. maybe even add a token performance bonus with confusing math, to motivate those that remain. not that they need it, they should be grateful for not having been let go for non-performance efficiency reasons.
Dynamic pricing makes it hard to know what you're going to pay. If they don't let consumers observe the price remotely they might just opt out instead of rolling the dice. Tesla's supercharging pricing is about to get me to that point. I know that I can go to select charging points at specific times of the week, else it is cheaper to charge at home. I can live with that, as long as it is predictable. What I won't do is constantly check the price to see if it is reasonable. With fast food I would not even bother.
Why is it always surge pricing for consumers, but not employee compensation? (in a non-exploitative manner like the gig companies employee) Yes, there have been cash-flow improvements like daily payments, and maybe other improvements to scheduling apps-- why not a solution for surge pricing for employees? E.g., Wendy's is busy for the Tuesday afternoon shift, wages +30% for workers who want to come in for X hours (if order throughput is +300% from 11am-1pm, why wouldn't they want extra hands, even if the marginal cost is much higher, albeit more transient). Or Amazon/DHL/UPS sees an increase over a weekend and offers $X bonus per shift for standby/off shift employees, increasing the amount until enough people volunteer.
Given that labor is viewed as fungible by most employers, why not enable more promiscuity by employees to help with wages and/or security? Things like background checks seem fairly transitive. Maybe do some sort of skill set certifications like food handling, warehousing, basic labor, etc.?
Amazon actually does that, they're called flex workers. Shifts come with a pay rate and their are "surge" times where they need more workers and can't get enough
It's lead time stuff for just-in-time. Ideally, employers would like to do that, yeah. But it's not easy to surge up on employees. But advanced shift calculation models try to optimize for that, yeah.
And workers that are too transient will fuck up your pipeline. So they need to be from your pool.
So many people seem to forget that we live under capitalism. Why is it always for customers and rarely employee compensation? The latter costs money and the former increases already obscene profits. It's capitalism. That's why.
Yes, you are stating the obvious assumptions that altruism is absent and there is an adversarial relationship between capital and labor with frequently diametric objectives. If companies are constantly complaining about "nobody wants to work" then they could move further up the labor supply curve by offering better wages-- but would it actually improve employer profits (via higher revenue) if they give up margin? If a McDonalds could serve 300 customers instead of 200 over a lunch rush, wouldn't it be beneficial to the employer?
From the employee side, they would get paid more, could pick up shifts at varying businesses based on their schedules. Then maybe at scale, such a platform would be incredibly useful for organizing labor. This obviously would terrify employers.
I'm not really debating, more of just sharing random ideas and complaining online, because this is basic game theory as to why employers wouldn't want such a tool (potentially higher labor costs short/long term, increased labor mobility, unionization risk, other issues like training/liability/insurance/taxes/etc.), but employees/labor could be greatly served by such a platform.
There's no universe where I go to a restaurant pulling something like this. That said, the employees at the Wendy's near me seem to have been pretending the place was closed the last couple times I've tried to go, so maybe it will sort itself out. I'm not exactly planning on wasting time going back regardless.
The basic contract of fast food has already been broken, before whatever price hike this turns out to be. You're getting bottom tier food but no longer the discount that makes it a defensible tradeoff.
For food deserts, sometimes lacking grocery stores, fast food is sometimes the only practical option. Convenience stores, bodegas, dollar stores, and fast food chains charge high unit prices and the majority of residents have little choice except to commute long distances to big box stores if they had the time, money, and transportation to do so which they probably don't. In these cases, demand for fast food becomes more inelastic where there are fewer or no other options.
This is in contrast to areas with very high residential property values and lower BMIs where fast food shops are distant and uncommon.
I predict this won't end well. People will pull up to the drive-thru, find that the prices are much higher than usual, and get mad, because they may not be able to back up out of the drive-thru or pull forward to exit. They'll either have to pay the high prices or wait to leave. Once someone gets burned by this a couple of times they'll just stop going to Wendy's.
Its kind of like when I predicted what would happen when $20/hour min wage wouldn't go well - everyone in CA is suffering now, including the ones making $20/hour (actually especially them).
They seem to completely miss the why of Uber surge pricing. It gets some customers to delay their ride, and gets some drivers to start their shift early. What does it do at Wendys, convince some more frozen hamburger patties to leave the freezer?
Variable pricing on uber or flights makes sense because people value their time or schedule flexibility differently and there is finite or slow to change capacity. An executive cares more about minimizing travel time than a student so they will pay more for the most convenient flight.
For restaurants, a "happy hour" might make sense to bring people in off-peak. But trying to charge more during peak hours only works if I can get my meal faster because all the price sensitive customers are gone. Maybe I don't eat enough fast food at peak hours, but that's not a pain point for me.
Maybe there ought to be regulation and enforcement of price gouging. Price gouging is legal at all times including during emergencies and disasters in 12 states specifically: Alaska, Arizona, Delaware, Montana, Nebraska, New Hampshire, New Mexico, North Dakota, Ohio, South Dakota, Washington, Wyoming. Libertarian paradise!
It is insanely cheap, getting that much calories in less than 10 USD would be a dream in any developed or poor nation. Might not be the best calories but will keep you (under) fed for a long time.
It used to be cheap.. but feeding myself, my wife, and 2 boys under 7 cost $34 last time, that was for 1 meal for my wife, a double - sandwich only for me, and 2 happy meals, and jr frosties...
Lately I've been simply eating jimmy dean breakfast sandwiches pretty much every meal, they're tasty, and 1 sandwich per meal fills me up, so I get like 4 days worth of meals for $10. (I had gastric sleeve surgery, so I fill up kinda easier than I used to). Not sure how healthy, but convenience -- it's 60 seconds in the microwave.
I'm currently going through a separation so I'm definitely not having the energy to cook anything, plus I'm moving into a motel temporarily until I can get a lease, which only has fridge/microwave.
> It is insanely cheap, getting that much calories in less than 10 USD would be a dream in any developed or poor nation.
Maybe in cost relative to local median income ($10 is about 1/11 of a one day share of US median personal income), but definitely not 10 actual USD or the equivalent in straight currency conversion. Proof: people actually live and do physically-demanding jobs with in much of the developing world, with wages which your statement would make impossible because every single person doing it would be dead of starvation within a few months.
I don't know about special, but it's not just the price, especially in emerging markets, where these places are often priced more toward the luxury or at least mid-range.
There's possibly a niche opening up for actually-cheap convenience food, but I don't know how good a business that would be.
They eat because the food hits a particular combination of cheap, being ready quickly on demand (hence "fast food") with minimal interaction, and acceptable quality. Its not optimized on any one of those axes.
Wendy's would make more money by focusing on their operations - indeed, as would most restaurants. If I'm fast fooding that day, I'm choosing Chick-fil-A over a Wendy's not because I like chicken more, but because I know it's never a shit show at Chick-fil-A, and it's always a shit show at Wendy's.
They would be better served in running a tight operation. Their restaurants are mostly tired old buildings, but sure, let's throw in surge pricing. It's so short sighted and stupid.
I think I'm in the minority of people who don't have a problem with surge pricing in principle. But this seems dumb. Varying prices like this pisses people off, and doing so for $2 (at most) hardly seems worth it.
Nawh, it's innovation in ways to be the biggest assholes by saying FU to employees and customers in new, short-term profitable ways that completely trash customer loyalty, goodwill, and brand value.
You joke but Subway did that last summer. It was great. You paid them $15/mo and you could get all your sandwiches 1/2 off. You only had to buy three in the month to make it worthwhile.
My wife and I did it (we each had to get a subscription because you could only use one discount a day) and we ended up getting 15 sandwiches each.
