Get ready for the Almost-a-Dollar menu
The down economy has consumers turning to fast food to cut costs, but rising commodity prices mean places with Dollar Menus like McDonald's may have to consider some inflation of their own. Rico Gagliano reports.
Fries, coffee and a Snack Wrap at a McDonald's restaurant in Des Plaines, Ill. (Scott Olson/Getty Images)
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Kai Ryssdal: With those food and energy costs I was talking about a minute ago, there aren't too many things left that you can get for a buck, even on McDonald's dollar menu.
Marketplace's Rico Gagliano explains.
Rico Gagliano: I'll get to that, Kai, but first the important news: McDonald's has a new Big Mac jingle:
[McDonalds ad]: Big! Mac! Two all-beef patties, special sauce, lettuce, cheese... Big! Mac!
Dang, that's funky.
Now what's not so funky for McDonald's is the ingredients listed in that jingle all cost more these days, especially the beef and cheese. Not a problem with a Big Mac -- McDonald's could eventually charge a bit more for it -- but if you have something called a dollar menu, the stuff on it should probably cost a dollar.
Darren Tristano is with food industry consultants Technomic. He says some changes are in the works.
Darren Tristano: Right now, McDonald's is taking a look at their double cheeseburger and looking at one slice of cheese instead of two, they're testing the double hamburger versus the double cheeseburger.
Tristano says the changes are necessary. Fast food value items have a tiny profit margin. They're supposed to get customers in the door, then, the theory goes, they'll buy pricier stuff. But not enough of those people are super-sizing these days.
Tristano: When people are purchasing one, two, three items instead of upgrading to other, more expensive side items, these chains are losing money. It's very likely this will shift and become more or a $1 to $1.50 menu, possibly even upwards of $2.
Maybe fast food restaurants could follow Carl's Junior's example. That chain features something they call "The Six Dollar Burger." It only costs four bucks, but in an inflationary environment, the name allows some wiggle room.
In Los Angeles, I'm Rico Gagliano for Marketplace.
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From CO, 08/05/2008
Here's another thought for the Dollar menus at the major chains. Their food costs are around 20-30% of every dollar they take in. So that 1 dollar hamburger you just bought has about 25 cents worth of actual food in it. What do you think the quality of ingrediets would be like if you spent 25 cents cooking dinner? Yes, some other places cost more, but they're willing to put better ingredients in front of you...
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