Business, Economics, and Taxes: Eat Cereal for Dinner

[RaceBoarder]

One thing I've always wondered about McDonald's is this. Are the prices the same everywhere in the country? Does a McDonald's hamburger in Grand Forks cost the same as one in San Francisco?

No... Market and location specifics can determine prices. I'm sure McD Corporate probably has price floor/ceiling limits in place, but they probably have a wide margin on those. Basically don't expect "Dollar Menu" items at a McD's on the Vegas Strip, in Times Square, or in an airport.

Edit: Here's some info for prices, both around the world and in the USA

 

[Jimjamesak]

No. Franchisees have the ability to change their pricing. So the downtown San Francisco location can charge a higher price than the Fargo McDonalds, but both are less than the Illinois Tollway McDonald's location.

That's why all corporate advertisements specifically state " * Participating locations only," "* Prices may vary," or other legal language. Franchisees can even charge different prices across their own portfolio of stores.


As the great Mitch Hedberg once said:

“Not available in Alaska or Hawaii.”

 

[Slap Shot]

It's easy for stuff to be cheap when you don't pay an honest wage...

Sarcasm? If they gave every worker a $5/hour raise it would hardly put a dent in their margins.

 

[Handyman]

No, I get that.

What ticks me off is that after increasing wages, companies still feel they are entitled to continue to have 5-10%+ increased in profit after absorbing the wage hits or whatever else hurts the bottom line. That's the root of all this. Can't be content making $1B in profits for a hot second. That number must be in a perpetual climb.

Gotta pay those sweet sweet dividends and buy back stock!

Ya know that stuff didn't become en vogue until the 1980s...care to venture a guess why? ;^)

 

[Handyman]

That has to be the corporation, which owns very few of the restaurants. They're just generating their revenue off of franchise fees, training fees, marketing fees, etc...

I can't believe individual franchise owners are clearing 30%, primarily because no chance the corporate office would let them do that without trying to steal some of it for themselves.

I believe I saw a documentary or something where franchisees almost always barely break even unless they own like 10+ restaurants. The terms the McDonalds Corporation puts into contracts are killer on top of owning the land and such. There is almost no margin and they are very good at hiding how bad the profit margins and terms are. They also prey on people who have minute understanding of how the economics work especially immigrants.

 

[Handyman]

Sarcasm? If they gave every worker a $5/hour raise it would hardly put a dent in their margins.

Did you actually read the comment?

It wasn't sarcasm, it was a statement. He was lamenting the prices back in the day, well back in the day things were cheaper because they underpaid people to make it. Pretty straightforward.

Of course they could pay better and still keep prices cheap but that is not the point I was making.

 

[aparch]

Ya know that stuff didn't become en vogue until the 1980s...care to venture a guess why? ;^)

Reagan. The answer is always Ronald Reagan. Every statistic, chart, comparison, everything deviates starting in 1981.

 

[FadeToBlack&Gold]

I believe I saw a documentary or something where franchisees almost always barely break even unless they own like 10+ restaurants. The terms the McDonalds Corporation puts into contracts are killer on top of owning the land and such. There is almost no margin and they are very good at hiding how bad the profit margins and terms are. They also prey on people who have minute understanding of how the economics work especially immigrants.

Well yes, that was the natural progression after the supply of clean-cut white couples Kroc originally marketed franchises to dried up.

 

[Slap Shot]

Did you actually read the comment?

It wasn't sarcasm, it was a statement. He was lamenting the prices back in the day, well back in the day things were cheaper because they underpaid people to make it. Pretty straightforward.

Of course they could pay better and still keep prices cheap but that is not the point I was making.

Yes I read it. They're still severely under paying and yet their margins have never been better. The increase in prices has very little to do with any marginal increases in pay at least so far as their bottom line is concerned. It's just an excuse to gouge consumers. Pretty straightforward.

 

[aparch]

Scott Sheffield, founder of Pioneer Natural Resources will not have a seat on the ExxonMobil board once the buyout is completed because the FTC has accused him of collusion with other US oil producers AND OPEC producing countries in keeping production down to raise gas prices and maximize profits during the Biden administration.

https://www.tiktok.com/t/ZTLQQG29L/

 

[dxmnkd316]

The McDonalds Corporation is ultimately a real estate holdings and brand licensing company. As of 2017, 70% of the restaurant buildings and 45% of the underlying land were wholly owned by the company, and leased back to their franchisees, along with the brand rights. This system has made McDonalds one of the most expensive franchised restaurants to operate, typically requiring $750k-$1m in liquid startup capital, and a total investment of $1-2m just to open a single new franchise. For comparison, you can usually open a Subway or a Jersey Mike's for about $250k.

I think DQ was the only one higher.

 

[Kepler]

The McDonalds Corporation is ultimately a real estate holdings and brand licensing company. As of 2017, 70% of the restaurant buildings and 45% of the underlying land were wholly owned by the company, and leased back to their franchisees, along with the brand rights. This system has made McDonalds one of the most expensive franchised restaurants to operate, typically requiring $750k-$1m in liquid startup capital, and a total investment of $1-2m just to open a single new franchise. For comparison, you can usually open a Subway or a Jersey Mike's for about $250k.

It's basically a machine to squeeze the franchisees, who become their captives.

 

[Handyman]

Yes I read it. They're still severely under paying and yet their margins have never been better. The increase in prices has very little to do with any marginal increases in pay at least so far as their bottom line is concerned. It's just an excuse to gouge consumers. Pretty straightforward.

Right...and? Did you somehow read what I posted and think I was saying otherwise?

 

[Handyman]

Reagan. The answer is always Ronald Reagan. Every statistic, chart, comparison, everything deviates starting in 1981.

Yup. In fact I believe I read the way things are being done now was illegal up until then. Regan deregulated it to the point that it almost destroyed the economy in the 80s and we never fixed it.

 

[Slap Shot]

Right...and? Did you somehow read what I posted and think I was saying otherwise?

Yes. Here is what I quoted:

It's easy for stuff to be cheap when you don't pay an honest wage...

The food is no longer cheap and yet they're still not paying an honest wage. It was cheap before because they didn't think they could charge more. Again their margins have never been better and yet they've raised their prices not because of raised wages. Maybe you think you're making a point but it's poorly worded if so.

 

[MissThundercat]

Here in Grand Rapids, they're paying up to $16/hour.

Most employees will never see that $16.

 

[dxmnkd316]

I made north of $11 at my fast food job in my final year. In like 2005.

 

[Handyman]

Yes. Here is what I quoted:



The food is no longer cheap and yet they're still not paying an honest wage. It was cheap before because they didn't think they could charge more. Again their margins have never been better and yet they've raised their prices not because of raised wages. Maybe you think you're making a point but it's poorly worded if so.

No my point was made...you just are trying to jump off it to prove something else. What is happening now has zero to do with what I was saying.

 

[St. Clown]

Here in Grand Rapids, they're paying up to $16/hour.

Most employees will never see that $16.

The McD’s near my house had wages starting at $15/hr and up. The Home Depot listed at $16.50-19.50 starting, depending upon type of work. I think Walmart was starting at $12/hr and a complimentary bulletproof vest.

 

[Kepler]

I made north of $11 at my fast food job in my final year. In like 2005.

$2.90, baby!

Up from $2.35 at my first job.

That's what I call mobility.

Of course, a house only cost $38 then.