The article is completely missing an important factor: franchise vs. corporate pricing. McDonalds has been running national promotions for $5 20-piece McNugget

The article is completely missing an important factor: franchise vs. corporate pricing. McDonalds has been running national promotions for $5 20-piece McNuggets. While franchise stores aren't always bound to follow national promotions (don't know about the McDonald's franchise agreement), consumer pressure is usually enough to get most franchises to do so. The phenomenon where the 20-piece costs the same as the 10-piece occurs when the 10-piece was already at or above the price point of the 20-piece promotional price. If it was above, you'll usually see the price adjusted to match the larger quantity promo's price, but rarely see it lowered below. The franchise will get a rebate against their royalty fees to corporate for the 20-piece, in order to maintain a specific profit level above base food cost. They don't get a rebate against the sale of the 10-piece, so they have no incentive to make it a more attractive offer, as doing so eats into their own margin. National promotions usually have brutally aggressive pricing, particularly if your store is located in a high cost of living area[1]. You'll see slightly different pricing behavior at a corporate store, but only about 18% of McDonald's are corporate ran[2][3]. Now, why McDonald's is choosing to aggressively market 20-piece chicken nuggets is something only they know, but may have something to do with the 40% increase in beef prices recently[4]. [1]: Personal experience managing several different Domino's Pizzas. Many promotions would be ran at break even or below, if it weren't for corporate taking a haircut on their ~10-15% royalty fees. Meaning the margins aren't sustainable for non-promo items. [2]: http://www.aboutmcdonalds.com/mcd/investors/company_profile.html http://www.aboutmcdonalds.com/mcd/investors/company_profile.... [3]: http://www.pricingforprofit.com/pricing-strategy-blog/strategy-pricing-at-franchise-corporate.htm http://www.pricingforprofit.com/pricing-strategy-blog/strate... [4]: http://www.bloomberg.com/news/articles/2015-01-15/burger-wars-the-cheap-chicken-nuggets-phase http://www.bloomberg.com/news/articles/2015-01-15/burger-war...