People rightly complain about the prices when it comes to chains like McDonald’s. They built their brand on fast, cheap food. But right now, the average cost of a Big Mac in the US $5.79, which is quite high given the raw ingredient cost of the sandwich components, around a 107% markup [1]. And that’s for a burger reconstituted from freeze-dried ingredients shipped in cardboard boxes. And the dining room experience is truly atrocious. It just doesn’t add up.
replyA burger made of fresh, never frozen ingredients from In N Out or Five Guys only carries a 50-80% markup [1], and those stores are properly staffed and consequently offer a much more pleasant dining room experience.
I suppose my point is that it is possible to deliver a good customer experience and still maintain a healthy operating margin. What McDonald’s is doing to make the whole experience worse is not a necessity to keep the business alive, it is a choice to maximize profits at the expense of the brand’s long-term reputation.
If Five Guys' ingredients cost more in absolute terms, they can afford a smaller markup percentage-wise so that's not necessarily a good comparison. I think despite their larger mark up McDonald's is still significantly cheaper.
replyTheir prices are not cheap, unless of course you use the app; I wonder why they structure the incentive that way...
replyExcept that, adjusted for inflation, a Big Mac was cheaper at that time.
replyRegardless, it would be even more expensive without reductions in staffing. It's not like they could be hiring twice as many employees at half the cost each and are just choosing not to. Fast food is a highly competitive market.
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