While they offer the same basic items, McDonald’s in particular seems to change their menu quite often. At McDonald’s right now, there are five chicken sandwiches, nine different burgers, twenty different types of coffee, and twelve desserts (assuming the ice cream machine is working). Then there’s the menu items they tried for a few years and abandoned like the McDLT, chicken strips (not nuggets), pizza, the Arch Deluxe, etc., etc.
I’m eagerly awaiting the arrival of the McPlant™ at our local McDonald’s. While I’m not vegan myself, my daughters are. So, whenever I crave a Big Mac and one of my daughters is with me, we head to a joint that offers vegan burgers (the Impossible Burgers aren’t bad).
Considering McDonald’s substantial investment in menu development and trend analysis, I’m surprised they haven’t embraced vegan options more quickly. Not only are they missing out on the growing vegan population (approximately 9.7 million vegetarians and 1 million vegans in the US), but they’re also overlooking meat-eating families and groups of friends who include a vegan or vegetarian among them.
Ever seen the price of flowers before and after Valentines Day?
From what I recall, fast food places had 2 main issues before now - low sales/demand and supply chain. A lot of the earlier tests didn’t sell well after the initial curiosity phase. And ramping up supply isn’t easy, even for a large chain.
The supply issues should be easier now that they’ve had a few years, but it remains to be seen if there’s enough demand to warrant a permanent addition or even expanded options. I’m sure they’d love to expand their customer base but that works both ways - they can offer new items, but they need people to either buy product or at least have the likelihood of increased sales to justify expansions to the menu. Just having an item on the menu for its own sake is just lost money.
Gas stations in our state (NJ) cannot change their prices hourly–they can do it once per day (last time I checked), so there’s that.
The seasonal pricing of flowers and such fits this kind of daily adjustment model.
Fast food menu items charging a customer a different price from the prior customer is a bit more sinister.
This sounds like when gas stations claimed, “We are not charging more for people using their credit cards” - they followed that with, “What we are doing is giving a discount for customers who pay in cash.”
I have a feeling Wendy’s is claiming, “It’s not ‘surge pricing’ if it’s the “normal price” but we provide a discount at certain times of the day.” And if the normal prices for certain items goes up, and the corresponding discount price just happens to match the “old” price, I’m sure that is merely coincidental…
I see that they are not doing it, however if I got hit by a surge price for a burger I guarantee you that I most likely will never return to that restaurant forever. Little things like that bother me to the point that I block them out of existence in my world. Or put another way fool me once, shame on you, fool me twice, ain’t happening.
That’s how it could work, but it’s tough when you get down to what minute it is when your place your order, what happens if you are on a long line and you should have gotten the discount but it’s their fault for not handling orders in a timely matter. Such a plan would seem to be a mess, though perhaps online only ordering would work where a menu of choices and prices can come up, like place order now, or at 2:30 you can get a 20% discount.
It’s already rigged in exactly that way. When there’s news that makes the price of crude oil shoot up, pay attention to retail gas prices the next day – or even sooner. OTOH, when oil prices fall, well, we have to wait for the supply chain to kick in before we can pass on the savings! Yes, eventually retail prices will fall, but don’t hold your breath.
Oil companies and their retailers have had this scam going for many decades now. When confronted by government regulators, they have meaningless multi-syllabic pseudo-economic bullshit terms all ready to justify it.
The day that the impact of Hurricane Katrina on gasoline supplies became obvious there were a bunch of closed stations in the area we lived in at the time. They weren’t out of gas, they were not allowed to change prices in the middle of the day.
So they had $2.99 on the signs and they were stuck with that price, but they would have to replace the gas with $3.50 wholesale gas. So they closed and sold the gas in their tanks the next day at $3.99.
Selling price is based on replacement cost not historical cost.
Why do we hold retailers to different expectations than the stock market? As described in several posts already, it can put them in a money-losing situation so “normal” prices are inflated to cover their losses.
Prices change so often anyway I’m not sure minute-by-minute pricing is that big of a difference.
What DOES annoy me is prices that change depending on who you are. A few decades ago when people started walking around with cell phones in their pockets retailers experimented with digital paper shelf pricing that displayed prices tuned to the person in the aisle at that moment. When I look at the prices for designer clothing or high-end audiophile equipment I totally get it, but it does seem creepy. But again, it makes economic sense.
If that’s the case, and the retailer purchased his gas at a time of high oil prices, and the price has suddenly dropped, why isn’t he dropping his retail price in accordance with this “replacement cost” principle? Because believe me, he isn’t, and I’ve been watching this scam for decades. But watch what happens when oil prices go up! Zoom! They can’t change the signs fast enough!
I’ve worked for companies that have gas stations in the past. I wasn’t directly involved in the setting of prices, but I was involved in the reporting of margins, and explaining the financial results to Wall Street (indirectly, I prepared “explainers” for our CEO & CFO). The company no longer exists (bought out by private equity who then franchise out the locations).
Retailers make higher margins during ex-refinery price drops and lower margins during price increases. We might have made 15 cents a gallon on average, and during times of less price volatility that’s what we’d make. Most of which goes in credit card and debit card fees, because you pay for the pre-authorization and the actual purchase separately on 80%+ of transactions (this was 20 years ago, it’s probably 90%+ now unless there’s a discount for cash). When wholesale prices dropped we’d make another 10 cents a gallon for a few days, then back to 15 cents. When prices rose, we’d get squeezed and effectively lose money after card fees. Again for a few days only. It was a rare event that moved margins by more than a penny or two a gallon for a whole quarter.
You can see the financial results for a handful of convenience store operators that are publicly listed. Most are either Private Equity owned, operate on a franchise model with mom-and-pop unit owners, or owned by giant global companies. So you can’t do that.
But I can assure you the lions share of profiteering from gasoline price volatility is taking place at the refinery and distribution level, not retail.
There are various pricing strategies at the retail level. All are very, very constrained by competition in most places. There are odd hyper local monopolistic cases, often created by local governments preventing competition, sometimes ostensibly for environmental reason, but sometimes because the very high priced station in the center of town is owned by a family that is popular enough and “generous” enough.
But on a main thoroughfare with ten gas stations in two miles, there are guys:
(a) Making 10 cents a gallon, paying it all over to the card processor, but making money off the soda, snacks and coffee side.
(b) Making 20 cents a gallon, paying 10 cents for card processing and doing a reasonable volume despite a 10 cent price disadvantage to operator on strategy (a)
(c) Making 40 cents, or even 50 or 60 cents a gallon but on 1/4 of the volume of strategy (b) by selling to people who just aren’t paying attention, are very brand loyal or are spending someone else’s money.
And of course there are differences between big brand and no-brand which adds further variations. But it’s mostly pretty competitive or extremely competitive. When costs go up all three strategies above are squeezed, when costs go down all make a little more for a few days.
Too late to edit. I actually cannot find any publicly listed gas/convenience operators any more that actually operate a significant number of stations.
I’m going to guess one of, if not the first factor, in people choosing fast food is they KNOW they can afford it.
No matter how you slice and dice it, if the consumer is unsure if they CAN afford it, (ie it might be higher or lower, depending), they WILL go to where they KNOW they can predict the price/afford it.
It seems to me this is most important for those choosing fast food.
I think Wendys is playing a dangerous game. And they can back pedal fast and all, but everyone knows, they WILL do the same thing only dressed up differently, (like a discount for some rather than an increase for others twist.)
I think they’ve already shot themselves in the foot, to be honest. People are now so accustomed to getting screwed over in some fashion, at every turn, that there’s little to no room for, ‘benefit of the doubt’, or ‘wait and see’. Predatory capitalism turns people into cynics. They’ve already done the damage in my opinion.
@Mighty_Mouse has already given the long answer, but the short answer is that retailers are not obliged, legally or morally, to keep their profit margins constant. I assume they set their prices based on all sorts of factors that I as a consumer am not aware of, and it seems naive to refer to it as a “scam.”
Thank you for an insider’s view on this. However, to cite the inscription on my Bill Maher coffee cup, “But I’m Not Wrong”! 
I’ve no doubt that, as you say, a big part of the profiteering occurs at the refinery and distribution level, but the phenomenon I’m describing is definitely real, and within the industry it even has a name: rockets and feathers. Prices go up like a rocket and come down like feathers leisurely wafting in the breeze. Here’s one of many good articles about the phenomenon:
The article is paywalled for me. Are they saying that the gas stations (which are rarely owned by any big oil refineries or oil producers) are the ones holding on to higher prices, or are the refineries and distributors doing that?
The article should not be paywalled, but it requires any ad blocker you may be running to be paused.
They are not explicitly blaming gas stations (nor should they, as I think this is a problem at all levels of what is essentially a corrupt and exploitative industry) although this excerpt seems to implicate them:
And perhaps the biggest hurdle to leveling charges of price gouging: It’s darned hard to prove.
Stephen Brown, an economist at the University of Nevada, Las Vegas, and senior editor of the academic journal Energy Policy, said that dubious pump prices “are likely the result of tacit collusion” and that “the sellers are likely taking advantage of consumers.”
However, “a lack of competition is a primary cause,” he said, rather than a deliberate (and illegal) effort by industry players to fleece customers.
In other words, everyone raises prices quickly and lowers them slowly because, well, they can.
And because every other gas station is doing it, you’d be a fool not to do the same.
Another comment from David Rapson, co-director of UC Davis’ Energy Economics Program:
“Oil companies and gas stations know how others are setting prices, and they adjust their prices to match those prices,” Rapson observed. “That’s why prices can go up quickly.”
They come down slowly, he continued, because consumers are at a disadvantage. People likely don’t know what’s happening in the broader market or even what gas prices might be on the other side of town.
Moderating: OK, please drop the Gas Station side bit. It can be a new thread, but don’t hijack this one please.
My apologies.