Fast Food Dollar Menus
When someone mentions fast food, you immediately think of unhealthy, cheaply-priced burgers and snacks. Companies like McDonald's and Taco Bell strive to provide appetizing and greasy meals to the general public for little cost, marketing their products as a cheap and convenient way to find sustenance. But since 2013, when McDonald's killed their Dollar Menu in favor of their $1 $2 $3 bundled menu, why are consumers no longer drawn to the cheapest items at these fast food places?
For companies like McDonald's, the only way they can produce and sell their items for $1 is through subsidized resources (like grain, wheat) and selling lots of the product to balance their profit margin. Burger King came under fire in the past for selling a $1 burger that costed $1.10 to make, which backfired on By having a dollar menu, they must assume that enough consumers will buy the product along with other, more expensive add-ons like drinks or desserts to make money. For example, McDonald's lures customers in with their $1 burgers but urges them to purchase a side of fries and a soda as well.
This business model worked in the past when more people went outside to eat, and more people favored burgers and fries over salads and protein shakes. In today's day and age, millennials are less favorable about fast food than they are about healthier options. According to a 2015 global report by Nielsen, 41% of Generation Z and 32% of Millennials would pay more for sustainable and healthier ingredients, compared to only 21% of Baby Boomers. In sum, the newer generation of consumers is drawn to a healthier lifestyle than those before them. As a result, fast food chains are seeing a drop in walk-in consumers and sales.
To combat this, companies like McDonald's have partnered with food delivery companies like Uber Eats and DoorDash in hopes of drawing in more young consumers, who increasingly rely on food delivery. They have also been more careful about changing their prices, as this lower demand for their products is more elastic than in the past. And if they lower their prices too much, there's a risk of consumers buying too much of one product. Given the high obesity rates in America, too much fast food could significantly increase them further.
With the changing tastes of consumers, fast food companies should follow the trend of making their products healthier and more sustainable. They shouldn't keep lowering prices but rather widen their variety of items past burgers and fries. After all, if they continue their current business model. they'll only see their sales and revenue drop each year.
Sources: http://www.bbc.com/capital/story/20180222-how-can-a-fast-food-chain-ever-make-money-from-a-1-burger
https://www.businessinsider.com/the-dollar-menu-is-dead-2018-12
For companies like McDonald's, the only way they can produce and sell their items for $1 is through subsidized resources (like grain, wheat) and selling lots of the product to balance their profit margin. Burger King came under fire in the past for selling a $1 burger that costed $1.10 to make, which backfired on By having a dollar menu, they must assume that enough consumers will buy the product along with other, more expensive add-ons like drinks or desserts to make money. For example, McDonald's lures customers in with their $1 burgers but urges them to purchase a side of fries and a soda as well.
This business model worked in the past when more people went outside to eat, and more people favored burgers and fries over salads and protein shakes. In today's day and age, millennials are less favorable about fast food than they are about healthier options. According to a 2015 global report by Nielsen, 41% of Generation Z and 32% of Millennials would pay more for sustainable and healthier ingredients, compared to only 21% of Baby Boomers. In sum, the newer generation of consumers is drawn to a healthier lifestyle than those before them. As a result, fast food chains are seeing a drop in walk-in consumers and sales.
To combat this, companies like McDonald's have partnered with food delivery companies like Uber Eats and DoorDash in hopes of drawing in more young consumers, who increasingly rely on food delivery. They have also been more careful about changing their prices, as this lower demand for their products is more elastic than in the past. And if they lower their prices too much, there's a risk of consumers buying too much of one product. Given the high obesity rates in America, too much fast food could significantly increase them further.
With the changing tastes of consumers, fast food companies should follow the trend of making their products healthier and more sustainable. They shouldn't keep lowering prices but rather widen their variety of items past burgers and fries. After all, if they continue their current business model. they'll only see their sales and revenue drop each year.
Sources: http://www.bbc.com/capital/story/20180222-how-can-a-fast-food-chain-ever-make-money-from-a-1-burger
https://www.businessinsider.com/the-dollar-menu-is-dead-2018-12
I think it's really interesting how you compared the different generations and how young people are getting healthier. Overall I think this is a positive thing for the US because it can help with the obesity issue but cost still plays a huge role in this. People who have less money are much less likely to buy a $8 salad compared to a $2 burger that they may feel more full from. However, I feel that in recent years people are much more concerned about their health and are more aware of healthier options, which is why fast food chains have to resort to very cheap meals.
ReplyDeleteThank you for sharing this information with us! In a nutritional sense, I believe, these fast foods' calories are so high and dense so that this fact leads to obesity issue since consuming them means taking a much higher caloric intake than the suggested caloric intake. Weight gaining is because the calories surplus which means the intake is greater than what you burn, and weight loss is because of the calories deficit. To be healthy or in a sense that trying to maintain a healthy weight, I think people should be more careful with their caloric options--they could still eat McDonald's, but they need to carefully monitor the calories that they consume. If the fast food chain industry could change the size of their meals into a smaller size and label the calories of their food, would that be helpful for being healthy?
ReplyDeleteI found this post really interesting to read and it was the first time I really thought about the dollar menu in such a way. When I did more research on this topic, I found out that the issue is also being addressed in many ways. The main problem that these conglomerates are facing is that what people are willing to purchase is changing. One thing McDonalds has done to address this is give local markets and franchises freedom to choose what is on the dollar menu based off of what people in the area like. This allows for a more targeted menu that caters to the interests of the consumers. Furthermore, the company is facing issues as the operators have formed an independent franchise association. McDonalds not only has to try to appease consumers, but its own operators to create a sustainable model for the company.
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