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Soft drinks are a loss leader for fast food, which is why judging McDos on the price of a single item like soda or mcmuffin is a bit oversimplified. Pricing str

Soft drinks are a loss leader for fast food, which is why judging McDos on the price of a single item like soda or mcmuffin is a bit oversimplified. Pricing strategy fluctuates (sometimes) independently of supply costs.

mynameishere 4y ago
Ha ha, no. That's where the money is. They have like 90 percent margins on those syrup/water mixes. ... I like discussions about inflation though because everyone brings up a particular item from their own budget. For instance, have you priced Little Debbie Zebra Cake Rolls lately? Did you even know they exist? It's like a mixture of a Swiss Roll and a Zebra Cake and they are completely awesome and I'm pretty sure the government is ignoring the 50 percent inflation I've been seeing on them lately. I don't know if this is incompetence or reactionary arrogance ("We'll stick with the hexagonal cakes they serve at Quadrangle Club thank you.") but I know the whole program is broken.
- creaghpatr 4y ago
  >They have like 90 percent margins on those syrup/water mixes. Wait, nevermind you're right about that.
- kipchak 4y ago
  I know this is sarcastic, but bakery outlets can be a great way to get your sugar junk for cheap if there's one nearby, though they're all pretty close to expiration.
- Sohcahtoa82 4y ago
  > They have like 90 percent margins on those syrup/water mixes. Not really. There's this myth that it only costs a few pennies to fill a cup with soda. I was a manager at a Subway from 2006 to 2012, so I got to see the costs of all our food. I did the math and found it cost about 1.7 cents per ounce dispensed, so a 32 oz soda cost 54.4 cents to fill assuming no ice. The cup/lid/straw cost us about 12 cents. At the time, we charged $1.69 for the soda, giving a margin of about 60%. This margin of course went up if they used ice, but went down if they refilled it.
  - c22 4y ago
    Okay, what was the margin on sandwiches?
    - Sohcahtoa82 4y ago
      The cost of ingredients for sandwiches was 22-35%, depending on what sandwich it was. Of course, that's only for the ingredients themselves. About 20% of revenue went to labor. I'm sure you're thinking, "But if you can make a sub in under a minute, and you pay $10/hr, shouldn't it be less?", but there's a lot of time spent not making sandwiches, such as cleaning, baking bread, and other food prep. Sure, the lettuce came pre-shredded in bags, olives and jalapenos are pre-sliced, but we had to slice the tomatoes, cucumbers, onions, and green peppers. And then of course, there's the cost of rent and utilities, plus franchising fees. Overall, our profit margin was under 10%.
  - eertami 4y ago
    > 32oz soda ... $1.69 I'm sorry, what? People drink a whole litre of soda with their lunch? I don't understand this on multiple levels. Who would buy this, why would anyone sell it, and should that even be legal?
    - Sohcahtoa82 4y ago
      I take it you're not American. We Americans love our soda far more than our friends around the world. I had sticker shock when I went to Italy a couple weeks ago and if I ordered a soda at a restaurant, I'd pay 3-4 euros and get a tiny 8 oz can. In America, at a restaurant, if you order a soda, it's $2-4, and you'll usually get a 12 or 16 oz cup and get free refills. At least I stick to the Diet/Zero-Sugar varieties so I'm keeping the calories down.
ghaff 4y ago
There's a reason movie theaters push supersized popcorn and sodas. The ingredients cost almost nothing. (OK, that's an exaggeration but they're certainly high margin--especially at movie theater prices.)

mynameishere 4y ago

Ha ha, no. That's where the money is. They have like 90 percent margins on those syrup/water mixes. ... I like discussions about inflation though because everyone brings up a particular item from their own budget. For instance, have you priced Little Debbie Zebra Cake Rolls lately? Did you even know they exist? It's like a mixture of a Swiss Roll and a Zebra Cake and they are completely awesome and I'm pretty sure the government is ignoring the 50 percent inflation I've been seeing on them lately. I don't know if this is incompetence or reactionary arrogance ("We'll stick with the hexagonal cakes they serve at Quadrangle Club thank you.") but I know the whole program is broken.

creaghpatr 4y ago
>They have like 90 percent margins on those syrup/water mixes. Wait, nevermind you're right about that.
kipchak 4y ago
I know this is sarcastic, but bakery outlets can be a great way to get your sugar junk for cheap if there's one nearby, though they're all pretty close to expiration.
Sohcahtoa82 4y ago
> They have like 90 percent margins on those syrup/water mixes. Not really. There's this myth that it only costs a few pennies to fill a cup with soda. I was a manager at a Subway from 2006 to 2012, so I got to see the costs of all our food. I did the math and found it cost about 1.7 cents per ounce dispensed, so a 32 oz soda cost 54.4 cents to fill assuming no ice. The cup/lid/straw cost us about 12 cents. At the time, we charged $1.69 for the soda, giving a margin of about 60%. This margin of course went up if they used ice, but went down if they refilled it.
- c22 4y ago
  Okay, what was the margin on sandwiches?
  - Sohcahtoa82 4y ago
    The cost of ingredients for sandwiches was 22-35%, depending on what sandwich it was. Of course, that's only for the ingredients themselves. About 20% of revenue went to labor. I'm sure you're thinking, "But if you can make a sub in under a minute, and you pay $10/hr, shouldn't it be less?", but there's a lot of time spent not making sandwiches, such as cleaning, baking bread, and other food prep. Sure, the lettuce came pre-shredded in bags, olives and jalapenos are pre-sliced, but we had to slice the tomatoes, cucumbers, onions, and green peppers. And then of course, there's the cost of rent and utilities, plus franchising fees. Overall, our profit margin was under 10%.
- eertami 4y ago
  > 32oz soda ... $1.69 I'm sorry, what? People drink a whole litre of soda with their lunch? I don't understand this on multiple levels. Who would buy this, why would anyone sell it, and should that even be legal?
  - Sohcahtoa82 4y ago
    I take it you're not American. We Americans love our soda far more than our friends around the world. I had sticker shock when I went to Italy a couple weeks ago and if I ordered a soda at a restaurant, I'd pay 3-4 euros and get a tiny 8 oz can. In America, at a restaurant, if you order a soda, it's $2-4, and you'll usually get a 12 or 16 oz cup and get free refills. At least I stick to the Diet/Zero-Sugar varieties so I'm keeping the calories down.

ghaff 4y ago

There's a reason movie theaters push supersized popcorn and sodas. The ingredients cost almost nothing. (OK, that's an exaggeration but they're certainly high margin--especially at movie theater prices.)