As a young Crew Chief in a franchised McDonalds (back in about 1978), I met Ray Kroc, who said: “Always remember, Rodd Hill–we’re not a hamburger store, we’re a french fries store.”
(Hm. Probably the richest guy I’ll ever meet, now that I think about it).
I know that our profit on sandwiches was very small–something like 5% range on beef, and if I recall correctly, 2.5% on the McChicken. The fries and drinks were the moneymakers, sugar and starch being cheaper than protein.
At that time (I sound like Irving Cohen!), the average company store in this market made an annual profit of something like 7-8%: and we were considered the hot market in Canada (greater Vancouver) at the time.
We also have to consider the grade of beef McDonald’s uses. They make it a point to emphasize that all of their beef is USDA inspected but there is never any mention of the grade of beef because it is far below the standards consumers would see at retail.
Prime, Choice and Select are the top three grades of beef in the U.S. I don’t think you can even find anything below this in an American supermarket. After that is Standard, which lacks marbling. Following that is Commercial, which lacks tenderness and is produced from the really old cows. Then, Utility, Cutter and Canner. I venture a guess that McDonald’s beef would be somewhere around the Commercial grade, if even that high.
Hell, the whole reason I eat at McDonald’s is to get that unique flavor. If I want a fast food burger that tastes more like an actual burger, I’ll go to Burger King or Wendy’s. You can’t get that McD’s flavor anywhere else, though… that’s worth at least 50 cents right there!
I loved this in the article: “[H]ead to your nearest Burger King restaurant and get a double cheeseburger for only $1. But franchise owners say it costs them $1.10 to sell them and are taking BK to court.[…]
RBR-TVBR observation: We wonder how much a double cheeseburger would cost when you factor in court costs and attorney fees.”
I’m not a fan of the McD’s cheesburgers, but I love the BK ones. Nice to know I’m getting a good deal!
Prime choice and select refer to the amount of marbled fat in the muscle tissue. Once the beef is ground marbling doesn’t make much difference just percentage of fat.
I guess it’s a “loss leader” to sell the cheaper burgers but I kind of think McD is still making something off of the burgers. But I agree they make the real money off the fries and soda. Not from me though, the rare times that I do go in I always ask for a double cheese burger to go and I say that’s all and they still say would you like fries with that? I say I told you what I want. And then they say would you like a drink with that? I just give up although they never listen anywhere anymore. They are just programmed to say “anything else with that” even though I said nothing else. I was thinking of just handing them a card that said…
I’m deaf I would like a double cheese burger to go and that’s all…
But then they would probably write down, do you want a drink and fries with that??
That’s probably why I don’t go there very often.
It’s fast food but slow ordering.
Also after all that they ask me if it’s to stay or go?
But then I said that when I order.
Am I the only one that knows what I want and can’t be up sold?
Oh yea sometimes I ask for a glass of water and then they say which bottled water would you like sir?
Dandmb50: “I guess it’s a “loss leader” to sell the cheaper burgers but I kind of think McD is still making something off of the burgers.”
Burgers that are ''loss leaders" lose money; ergo, McD is not making something off of the burgers if that is the case! This thread is not young and yet the meat of the issue still hasn’t gotten across!?
Me too. We had one, but it was destroyed in an ice storm. It’s been supposed to reopen for a while, but it has never happened. It seems that reconstruction has stalled in this economy.
The Value prices are funny, especially for McNuggets.
4 cost $1.
10 (I don’t know if they do 6 anymore) cost $3ish.
20 cost almost $8.
We order 5 4-piece and save almost half the cost. I haven’t checked their fry prices, but I suspect the same, and I know the drinks are similar. Forget the lottery- this is a new tax for people who are bad at math, but the profits go to the company and not the state. I wonder what percentage of people are dumb enough to fall for this- and I also wonder why the company sets it up this way. I mean, why give people a cheaper out for what they’d buy anyway?
Yeah but if you offer large portions people will buy less of them. So at a table of 8 people maybe they would order 25 drinks instead of 30 over the course of a night.
I noticed that with cheesy tots at burger king. You can buy 6 for $1.49 or you can buy 12 for $3.19. Not a huge difference, but I don’t get why they are doing that.
