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No way that McDonalds is selling Big Macs or French fries at cost. Do you really think it costs McDonalds nearly €2 to serve you an order of fries? Or nearly €4
by jorvi 9y ago
No way that McDonalds is selling Big Macs or French fries at cost. Do you really think it costs McDonalds nearly €2 to serve you an order of fries? Or nearly €4 for a Big Mac.
- joezydeco 9y agoGiven labor costs, packaging/disposables, energy (freezer, grill, holding cabinet, environmental, ventilation), franchise percentages, real estate lease, shrinkage/waste, promotional discounts/combo meals...yes. It comes very close.
- dkrich 9y agoMcDonalds operates at a larger scale than any other restaurant in the world and by a very large margin. What works for McDonalds won't work for restaurants that must order supplies on a much smaller scale. Also, in McDonalds' early days they didn't have the leverage over suppliers that they wield now, so its food costs have come down by orders of magnitude. This reminds me of something my cost accounting professor told me- to get to large scale businesses have to price items as if they are already at large scale. If you buy a stamping machine that cost $1 million capable of maximum output of 100,000 units, but currently only have sales of 5,000 units, do you price each unit at 1,000,000/5,000 or 1,000,000/100,000? If you opt for the former, you'll never get to maximum output because customers won't be able to afford your prices.