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Short answer: because both Chick-fil-A and McDonald's want it that way. Longer answer: McDonald's has chosen to optimize for total revenue, while Chick-fil-A h
by jonas21 7y ago
Short answer: because both Chick-fil-A and McDonald's want it that way.
Longer answer: McDonald's has chosen to optimize for total revenue, while Chick-fil-A has chosen to optimize for something more like ROI on each store. This is a direct consequence of the different franchise models, where McDonald's takes a cut of sales and doesn't have an ownership stake in each location, while Chick-fil-A take a cut of both sales and profits, and has ownership of the physical location.
As dave5104 mentioned, there are over 14,000 McDonald's locations in the US vs around 2,000 Chick-fil-As. McDonald's has saturated the market to the point that individual McDonald's locations cannibalize the sales of other nearby locations.
For example, there are 14 McDonald's locations within a 5-mile radius of where I live. If you closed down half of them, total revenue would probably drop some, but not anywhere near half. Many people who wanted McDonald's would just travel a little bit further to get to one. As a result, per-store revenue would go up. Per-store profit would go up by an even greater percentage since there are fixed costs per location. And if you closed the right number (which might be more or less than half), total profit would go up as well.
This would be great for franchisees, but from McDonalds' perspective it's worse since total sales would decrease, and that's what they're getting a cut of. Chick-fil-A's model, where they take a cut of both sales and profits aligns their interests more with their franchisees.
- privateSFacct 7y agoInteresting some decades ago I think McDonald's did a study that led to something called the 4 minute McDonald's universe which was a distance they found people would go for spur of the moment purchasing. Obviously impractical, but this idea of optimizing for total revenue has been around for a bit I think.
- asdff 7y agoAnd it's not limited to mcdonalds. Starbucks is getting notorious for this. Here is an area by me with three starbii: https://goo.gl/maps/qR2XLLVYmqiyrHtLA https://goo.gl/maps/qR2XLLVYmqiyrHtLA One in the vons, directly across the street from one in the ralphs, and if you head north on vermont in this street view you will hit a burger king. Today that is a freestanding starbucks. Three starbucks locations in less than a square mile.
- Reedx 7y agoThere's a spot in SF where two Starbucks are about a 30 second walk apart, depending on your luck with the walk sign. https://www.google.com/maps/search/starbucks/@37.7843267,-122.404059,65m/data=!3m1!1e3 https://www.google.com/maps/search/starbucks/@37.7843267,-12... They're so close that I've switched locations depending on the length of the line. Sometimes both are packed though.
- technofiend 7y agoSounds familiar except for the walking part; as a rule we don't walk much in Houston because the city is not designed for it and it's also sauna levels of hot and humid much of the year. https://www.chron.com/business/article/One-on-corner-there-are-3-places-to-get-your-1745816.php https://www.chron.com/business/article/One-on-corner-there-a...
- masonic 7y agoEven 20 years ago, there was at least one intersection in both Seattle and Vancouver that had two Starbucks (opposite corners).
- copperx 7y agoStarbii should be Starbuckii, no?
- xwowsersx 7y agoHaha! Is starbii plural for Starbucks?
- eggsome 7y agoPretty sure this episode was from the 90's: https://www.youtube.com/watch?v=FRz3vfRFfs4 https://www.youtube.com/watch?v=FRz3vfRFfs4