Noticed the price of fast food lately? Wonder why it is so expensive? Wonder what happened to portion sizes? Wonder why Chili’s and Applebee’s can sling a cheaper meal and they are full service?
Well strap in, it’s going to be a rough ride!
While this blog is mostly based out of California, I am sure in your local town that you have noticed similar issues.
Quick history lesson, about 2 years ago the People’s Republic of California agreed to raise the minimum wage for fast food workers to $20 an hour. Keep in mind the minimum wage for other workers is currently $16.50 per hour. Fast food is hard to define in a sense, I would say any quick service restaurant with the large portion of their locations having a drive thru. I say large portion because we have 1 Chipotle and 2 Panda Express stores that have drive thru’s but the lion’s share of them do not.
This caused some issues for both types of stores; fast food and fast/casual eateries. First of all, most fast/casual think Chipotle and Chili’s types likely didn’t start at $20 an hour, their fast-food counterparts did. So, they had to work through some staffing issues.
Now a couple of years later, we can see where the carnage from this law is laid.
I am checking the KFC website right now, and an 8-piece bucket, no sides or beverage is running $25. Actually $24.59 but I digress. My colleague and I used a coupon where the same 8-piece bucket is $13.99. As you can see it’s now quite expensive, oh and the pieces of chicken are small, I could have knocked off all 8 on my own.
(Editor’s Note: occasionally, KFC coupon prices on their bulk mail fliers are actually more than the regular price they charge at their store.)
Let us compare KFC to the Chili’s located just down the road from my office. Here at Chili’s, they are willing to do a burger, fries, soda, and either a salad or chips and salsa for $11. Chili’s is a sit-down place, so I know tax and tip will be added but it’s a far cry from KFC. Oh, the chips and salsa are bottomless and they even insisted I leave with a bagof chips and a pint of salsa! Oh, Red Robin has a similar deal of a burger, soda, and unlimited fries. Again, it’s a sit-down place. No coupon required by the way!
So how can Chili’s/Red Robin do it you ask? Their stores are bigger, have a full kitchen. and lot’s of waitstaff!
Several factors actually.
First, fast-food places do not serve alcohol, this is a huge advantage as chances to upsell a more expensive drink add a massive advantage! Your typical alcoholic beverage is $10 give or take, so in essence your ticket doubled. Bringing to point #2. The longer you linger in the booth, the more dessert starts to look good. Ah, now let us add the chocolate brownie at about $9. Your lunch just became $30. But I digress, as most likely do not do this! #3 is the menu is far more complex at the sit-down restaurant. Sure, you went in there for the loss leader, but you spied that steak, or pile of nachos that look better. Well, that’s not part of the meal deal and thus more expensive ticket.
At fast food, the upsell chances are minimal. Sure, offer me the meal deal of fries and a coke for an extra $7, not going to happen when you want $25 for 8 pieces chicken. At that price, I’m washing it down with water from the tap. The other massive disadvantage is fast food is supposed to be… well fast. I do not want to linger in the drive thru, get me my meal so I can get back on the road. This is another issue as we waited nearly 12 minutes at KFC to get our order in the drive thru. Fast is key, whereas at Chilis I am not in a big hurry.
Fast food, having to be offered as cheap as possible, is another way they are behind the eight ball. As a result, they must walk a fine line on who they hire/how many they hire, again fast food is supposed to be cheap! Quality of product, as I mentioned, the pieces of chicken resembled a pigeon more than a chicken. Wendy’s has since switched to cheap shredded lettuce rather than leaf lettuce. Most places charge for sauces now. Last time I was at Burger King, my Whopper was gray, it almost appeared boiled or microwaved. It didn’t taste like much. Oh, and the Whopper, fries, and drink “meal” was about $18.
In business school they teach you, quality, price, service…. Pick 2/3. As it’s impossible to hit on all 3. The problem here is, they have now made it very hard to hit on even 1. $18 for a meal deal is a ton of money…. Oh, and in my opinion, horrific quality to boot. $25 for 8 pieces chicken that really cannot even be shared by 2 is bad as well. Fast food used to be an asset, a light and quick way, to sling a meal on the cheap. It’s the opposite now. Our Governor and the older generation of bleeding hearts, want fast food to be a career, as such, the food is priced how it is. Oh, and the minimum wage for fast food went up to, I believe, $20.70, so your meal just got more expensive. As such, the operators have tried to hold the line on price, but have resorted to cheap quality food, or very slow service.
It will not get better, actually it’s gotten far worse.
Wendy’s recently announced the closure of 350 stores this coming year. Jack in the Box closing 150-200. The carnage has started. They simply cannot compete. If you supported the fast-food minimum wage hike and relied on them for your food to boot, you reap what you sow!
Johnnie Does