The good tactic of fast food business
In 2009, some franchise owners sued Burger King for a promotion that required them to sell for $ 1 the double cheeseburger, whose production cost is $ 1.10. The court agreed with the chain. That the latest round of price reductions is a success depends on many factors, including how the image of the fast food industry is changing.
The drop in the number of customers that go to fast food stores could be an indicator of changes in our tastes. Those under 40, known as millennials and their adolescent and pre-adolescent counterparts, Generation Z, are massively avoiding high-calorie foods that are not farm or organic products. The results of a global study conducted by Nielsen revealed that 41% of Generation Z and 32% of millennials would pay extra for ingredients from sustainable sources, compared to 21% of Baby Boomers, the generation that was born between the years 1946 and 1964.
More than half of the Kentucky Fried Chicken (KFC) fast food outlets in the United Kingdom were closed in mid-February as a result of chicken shortages in the different entities, which triggered panic. With regard to the unusual situation, which had its own label on the social network Twitter: #KFCcrisis, the Metropolitan Police of London published a message in its account requesting people to stop calling them.
It has become very clear that annoying consumers take their fast food seriously. For this reason, the main chains in the United States have put a new sales strategy that could make a lot of fanatic of this type of food.From January, the most recognized American companies put into effect a menu offer with a big discount making fast food something even more economical than usual, to the point of offering it for a lower price than a loaf of bread or a container small of juice.Financial analysts at the Credit Suisse bank, in December 2017, released a report in which they pointed out that the so-called fast food price war was heating up.
For example, McDonald's started the year with a novel proposal, known as the $ 1 $ 2 $ 3 menu, which makes it easier for customers to combine and select products from an offer with three different prices. His rivals did not take long to do the same.
For its part, the hamburger chain Wendy's also presented about 20 new products on its menu for a price of just $ 1 each. The chain of changes was followed by the Tex-Mex Taco Bell food chain offering its nacho fries, the famous fried potatoes served with nachos sauce for $ 1.In the case of McDonald's, Credit Suisse estimates that between 2012 and 2016 the number of customers entering their stores fell by around 11%, so the price reduction proposed in January could be a new attempt to recover customers.
It happens that as very few companies control much of this sector, businesses strive hard to make a difference between the products offered by the competition, for example, offer cooking food in a gas oven instead of frying or offering toys along with your children's menus.
According to Patricia Smith, a professor at the University of Michigan, a specialist in the economic analysis of the fast food business, companies begin to compete with discounts in a race to offer the lowest prices.Smith has questioned the intentions of McDonald's to recover its clientele because it will earn money selling hamburgers for US $ 1 if it can make it cost less than that amount and manages to sell many of these.
The expert emphasizes that the sales of the complements are also crucial.This reduction in prices to attract more customers is a tactic that can be turned against the company if these cuts end up putting the price below the costs of food production and cannibalize the profits.
