Fast restaurants are more known for things like convenience and value menus than they are for the quality of their food. This is not an accident because in the competitive fast food game making money is about the little things like charging for extras an up selling the bigger size.
10. Less Is More
In the competitive world of fast food chains every little thing counts and can be the difference between turning a profit or going out of business. The more successful restaurants chains have discovered that offering customers a relatively limited choice of menu items is cost effective. In-N-Out Burger has mastered this model offering its loyal customers burgers, French fries and a variety of soft drinks. Within this limited menu there are a few variations such as cheeseburgers and milk shakes. Although In-N-Out is a great example, most of the fast food chains use this system to varying degrees. For example, potatoes are cheap so it makes sense to offer their customers only French fries instead of a selection of side dishes that are more expensive to mass produce. The lower the restaurants can keep their costs the great their potential profit margin will likely be. If a chain like McDonald’s were to offer pizza (McDonald’s tried this briefly and failed) and Mexican food like burritos and enchiladas it would be a mistake. It would greatly increase the restaurants’ costs of producing menu items and these increased costs would eventually be passed on to customers.
9. Super Sizing Profits
Do you need that extra giant soda that would satisfy a team of thirsty kids? No, but for a few cents more it can easily be yours so why not get it? This pop psychology is the basic idea behind the efforts of fast food chains to up sell you more food than you need for more money than you were intending to spend when you drove up to the drive-thru. The fast food companies even conducted a study that showed that the overwhelming number of people who are asked if they “want fries with that?” answer yes. This is why the employees are trained to ask you this and also to ask you if you would rather have the larger size for just a few cents more. You’re already spending “X” amount of money so what is a few cents more? These few cents are actually a lot to the food chains. Think of all the transactions that go on at thee restaurants every single day. If they can get each customer to spend just a few cents more to get the bigger size than this adds up to a lot of money. This concept also applies to a bigger meal too. You might have showed up intending just to get a sandwich, but for a little more money you ended up driving away with a meal deal with fries and a drink. The company ended up with more money in its pocket.
8. Clip And Save?
Many of us have grown up believing that using coupons to purchase items is a smart idea because these little slips of paper save us money. But is this really true? The answer is a little more complicated than you’d think. There is no shortage of fast food coupons available for you to use. They are in magazines, advertising supplements you get in the mail and on the internet. They are so prevalent it almost has to make you ask – what gives with all the coupons? it turns out the fast food chains consider the coupons to be like a form of bait. This bait will get you in the door and maybe you will just get what the coupon allows for, but it’s very likely you will end up spending more than you intended when you clipped the coupon. The coupons are not about saving you money, but simply getting you to spend money you were not necessarily intending to spend on fast food. Even the coveted free item coupons are really a ploy to get you to spend more money. The bottom line is fast food companies wouldn’t issue coupons if they weren’t good for their bottom lines. So the fast food chains will continue to offer us coupons as long as they help them make more money.
7. The Invaluable Menu
Most of the value menus you see being pushed by the fast food companies play a similar role that the coupons play. They are more of a marketing ploy than a money maker for the food chains. For example, dollar menu items don’t usually make money for them, but they are hoping that customers will be lured by the cheap items featured on the value menu, but end up ordering more expensive items. These fast food chains can’t survive if you just get a hamburger off the value menu; they really need you to get inspired to order a full meal with a drink and French fries and get talked into buying the bigger size while you’re at it. many of the fast food chains have said they would like to get rid of their value menus, but are concerned that they would have more trouble luring customers in to spend any money. They see these menus as a necessary evil or a cost of doing business in the highly competitive fast food market. As for the customers, if they do stick to the items on the value menu they can get a decent amount of food for a pretty cheap price. However, the companies continue to work hard to get these customers to spend more than they intended.
6. Easy Does It
One of the major reasons fast food chains have thrived over the years is that they are convenient. Think about when you go on a road trip: how far can you ever get from a McDonald’s or some other major fast food chain? Being there whenever you want them is a major strength and they have been smart in exploiting this fact over the years. These giant corporations would all like to believe that customers love the food so much that they will go out of their way for a hamburger or a shake, and sometimes we do, but they have faced the fact that being user friendly, or being available on demand, is a big part of their model. You might say that these companies have decided to make a necessity into a virtue. This convenience has paid off because more than 9 million Americans find their way to a fast food restaurant every day and many of these people visit fast food restaurants more than once a week. It might stand to reason that they don’t actually love the massed produced food as much as the companies would like to believe. What they do love is how easy and quick it is to use the drive-thru to get a quick, and hopefully inexpensive, meal. The other factor to keep in mind is that most people don’t like to cook all the time and fast food restaurants are an easy option to choose when you’ll likely pass several of them on the way home from work.
5. Sell Me A Dream
Don’t freak out, but you’re not really going to have to pay $2,000 for any burger at a fast food restaurants. However, the chains do make a lot of their money by up selling more expensive items. These fast food companies have not become internationally successful by selling you the cheapest items on their menus. The marketing gimmicks like value menus and coupons are just that – gimmicks to get you to go to the restaurant where they can convince many of us to spend more to get the new, big sandwich with all the extras. Up selling can be a very successful tactic because you are already there, you’re hungry and for a little more money you can get the super deluxe meal so it’s a win – win, right? It’s at least win for the restaurants, but you get way too many calories on top of a larger bill. The fast food restaurants advertise the more expensive meals on the menus with colorful pictures of big, juicy burgers and crisp, golden French fries. If you only have a couple of bucks in your pocket when you roll up to the drive-thru it’ll be a lot easier to stick to the value menu and be done with it. However, these are not the type of customers they have built their businesses on for decades. All of These fast food chains have a pile of studies that show them that if you have more to spend they have a good chance of getting you to spend it at their restaurant.
4. The Business Of Fast Food
There is a well known statistic that is often repeated about restaurants. according to the numbers more than half of new restaurants go out of business. Most of these were small scale operations that tried to go it alone in a crowded and highly competitive industry. The saying goes there is safety in numbers and this really seems to be the case when it comes to fast food restaurants. The fast food franchises like McDonald’s and Burger King are internationally recognized global brands so its a wonder that any of the so-called mom and pop establishments can survive. These fast food chains use their resources to undercut the competition and huge marketing budgets to make sure they have a continuous presence in the market place that is difficult to ignore. These big corporations can rely on tactics like value menus and up selling to draw in customers and get them to spend more money than they intended when they show up at the restaurant. They can wait out the smaller competition that can’t afford to match “dollar menus” and other gimmicks that actually don’t make any money, but can expand the customer base for the big chains. They are good at business and they have had decades to refine their techniques that get you inside their stores to spend money on a regular basis.
3. Fast Food Wages
Everyone knows you are not going to get rich working at a fast food restaurant. Hiring employees as inexpensively as they can is actually part of their formula for success. Mostly these chains rely on teenagers who are getting entering the job market with limited skills and looking for their first job. The kids get training, experience and a pay check and the companies are able to pay them less than they would be pressured to pay older, more experienced workers. In recent years many workers have been complaining about the relatively low wages and have started demanding a higher minimum wage – sometimes as high as $20 an hour. While this sounds good to the employees it doesn’t make sense to the fast food companies who are used to drawing from a big pool of young, low-skilled workers. The companies argue that paying employees substantially higher wages would mean fewer jobs or passing the higher labor costs on to the customers. Neither of these are an attractive option, but there is even something more troubling that people need to think about going forward. As computers and artificial intelligence continue to get more sophisticated there is a real danger that many fast food jobs could soon be replaced by robots who work without pay and won’t complain about it – at least until they gain consciousness!
2. Nickle And Dime
It’s an old adage that it’s the little things that count and this certainly seems to be true when it comes to the big fast food companies. While it’s still true that these companies do not charge for things like straws and napkins they do charge extra for a lot of little things like sauces and condiments like salsa and guacamole. Many of these chains will also charge extra for things like cheese as well as for certain substitutions. Condiments are generally very cheap for these companies to produce and the fast food chains often charge more than a dollar for each of them. Much like with the fast food chains’ reliance on the profitability of their soft drinks, these little extras add up to a lot of profits. The fast food companies assume since you’re already at the restaurant you’re ok with spending some money and you probably won’t notice if you have to spend a few more dollars to get the little extras you want. Although, it can feel a little annoying to feel like you’re being nickeled and dimed on top of the money you’re already spending. On the other hand it is possible to avoid this by being vigilant about not choosing any extras. It is strange to think that the viability of these must-billion dollar corporations rests with whether or not customers are willing to pay extra money for things like sauces and dips.
1. Soft Target
After burgers and french fries, fountains sodas are the items we most associate with fast food restaurants. It turns out this is probably not an accident as these cheap and easy to make fountain soft drinks are big moneymakers for these corporations. It only costs a couple of pennies to mix up these sweet concoctions of carbonated water and flavoring and then the fast food chains can turn around and sell cups of soda for several dollars. This big discrepancy can work out to as much as a 90% profit on their soft drinks. So there is little wonder why these companies are always pushing you to get a drink with your meal – it’s almost pure profit. Including a soft drink in a so-called value meal costs the chains almost nothing, but will usually add several dollars to your tab. Remember this the next time you go to a movie theater and you get charged $5 for a soda to go with your overpriced popcorn. The large profits they make on the soft drinks allow them to charge prices on the value menus that don’t really turn a profit because they know they’re going to make all the money back and more with the soft drink sales. However, there might be trouble on the horizon because many customers have been trying to cut out soda in an effort to be healthier and this has put a crimp in the fast food chains’ profits in recent years.