[Analog Kid]

Yahoo

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Burger King franchisees sued the hamburger company this week over its $1 double cheeseburger promotion, saying they're losing money on the deal and the company can't set maximum menu prices.

The National Franchise Association, a group that represents more than 80 percent of Burger King's U.S. franchise owners, said the $1 promotion forces restaurant owners to sell the quarter-pound burger with at least a 10-cent loss.

While costs vary by location, the $1 double cheeseburger typically costs franchisees at least $1.10, said Dan Fitzpatrick, a Burger King franchisee from South Bend, Ind. who is a spokesman for the association. That includes about 55 cents for the cost of the meat, bun, cheese and toppings. The remainder typically covers expenses such as rent, royalties and worker wages.

"New math, or old math, the math just doesn't work," Fitzpatrick said.

After testing the $1 deal in markets across the country, the discounted burger went on sale nationwide last month even though franchise owners, who operate 90 percent of the company's 12,000 locations, twice rejected the product because of its expense.

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Restaurants, especially fast-food chains, have been slashing menu prices because of the poor economy. Executives hope the deeply discounted deals will bring in diners who are spending less when they eat out, or opting to stay home altogether.

When the $1 double cheeseburger was announced this fall, analyst said it could increase restaurant visits by as much as 20 percent. But despite that boost, a Deutsche Bank analyst said as much as half of the gain recorded from increased traffic could be lost because customers were spending less when they ordered food.

The lawsuit was filed Tuesday in U.S. District Court in Southern Florida.

[Broph]

Isn't this usually offset when the customer also orders french fries at $1.50 for 20 cents worth of potatoes?

[Rhys]

Broph, on Nov 13 2009, 07:58 AM, said:

Isn't this usually offset when the customer also orders french fries at $1.50 for 20 cents worth of potatoes?

Actually, the drinks are where they really make their money.

[Nittany Lioness]

You know, the fast food joints around here have self serve soda machines, \
and my hubby seems to think you're allowed to refill.
I saw him do this as we walked out after eating, and was like - "Uh, dude?"
He insists they expect you to do it.
But they charge different prices for different sizes, even within the Value Meal Deals,
and his response is that the cost is in the cup itself.

I never even finish my Small drinks, since small is now at least an old timer Medium.
Heck, I'd prefer a child's Small, if they'd offer it in a Deal.

I admire men who can down so much fluids and not pee twice as much as us ladies.

As for this $1 deal - sign me up! BK's burgers taste 10 times yummier than any other chain, IMO.
I'd order 2 of those burgers and skip the fries. $2 bucks and a filling lunch - score.

This post has been edited by Nittany Lioness: 13 November 2009 - 11:56 AM

[Nick]

Nittany Lioness, on Nov 13 2009, 11:54 AM, said:

You know, the fast food joints around here have self serve soda machines, \
and my hubby seems to think you're allowed to refill.
I saw him do this as we walked out after eating, and was like - "Uh, dude?"
He insists they expect you to do it.
But they charge different prices for different sizes, even within the Value Meal Deals,
and his response is that the cost is in the cup itself.

Nearly every fast food restaurant I've ever seen allows free refils while dining in. Those few that don't either keep the drink machines behind the counter or have a sign saying "Refils $0.35" or something. The cup sizes are largely irrelevant for dine-in customers. There's two big reasons they do this:

1. Most of their business goes out the door and out the drive-thru window, so it does make a difference.

2. Psychology and the perception of value; restaurants get more upsells when they bundle a larger drink with larger fries--even for dine in customers. While there's not really any greater value between a small and large cup when you're allowed unlimited free refils (beyond not having to get up as often and having a larger container to fill up on your way out and take with you). $1 for more fries? eh. $1 for more fries and a bigger cup? I'm sold!

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I never even finish my Small drinks, since small is now at least an old timer Medium.
Heck, I'd prefer a child's Small, if they'd offer it in a Deal.

I think the changeover to high fructose corn syrup in the 80s is a factor in this. I've read (and experienced, but it could all be in my head) that drinks sweetened with HFCS don't trigger the "full" feeling like drinks sweetened with sucrose (real sugar). So people are more inclined to drink the crap by the gallon.

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I admire men who can down so much fluids and not pee twice as much as us ladies.

I've been accused of being part aquatic mammal. I keep a 34oz mug on my desk at work and fill it at least twice day, often more. And that's with very little physical activity. I'll guzzle half a gallon during a single trip to the gym.

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As for this $1 deal - sign me up! BK's burgers taste 10 times yummier than any other chain, IMO.
I'd order 2 of those burgers and skip the fries. $2 bucks and a filling lunch - score.

It's a good deal (maybe too good, considering the lawsuit). And Burger King's burgers *can* be the best of the big chains, if you get one that's cooked to order. Often times they will grill a batch of burgers and toss them in a drawer and then microwave the burgers before serving. I've given up on whoppers and quarter pounders, as this is usually the case with those patties. However, the regular patties usually seem fresh when I order them--perhaps they go quickly enough that few if any make it to the "holding drawer."

Fresh-cooked BK burgers > McDonald's > Wendy's

Reheated BK burgers < Wendy's < McDonald's.

I pick McD's more often because they're at least consistent with their mediocrity.

This post has been edited by Nick: 13 November 2009 - 01:11 PM

[Chakoteya]

IF they can afford to sell food that cheap, just what quality are the ingredients?

[Pixiedust]

^ Generally I agree, but in this case they can't afford it.

[Nick]

You know what . . . I'm calling shenanigans:

Ghost Rider, on Nov 12 2009, 11:31 PM, said:

While costs vary by location, the $1 double cheeseburger typically costs franchisees at least $1.10, said Dan Fitzpatrick, a Burger King franchisee from South Bend, Ind. who is a spokesman for the association. That includes about 55 cents for the cost of the meat, bun, cheese and toppings. The remainder typically covers expenses such as rent, royalties and worker wages.

First off, 1 lb of ground beef typically costs between $2 and $3/lb at the grocery store. Wholesale and bulk prices for an outfit like burger king are considerably less. I think they exaggerate their $0.55 claim. Food cost and wages are the only variable expenses.

And what the hell are fixed costs (rent, royalties, etc.) doing in that figure? The marginal cost of a double cheeseburger is well under a dollar. They're also not capturing externalities such as the amount of extra (more profitable) items purchased WITH the double cheeseburgers.

They're not losing a damn cent (and probably profiting) on this 99cent burger promotion. Greedy franchise owners are just trying to squeeze the home office for whatever they can get. Fast food has a VERY elastic demand curve, they all know this.

This post has been edited by Nick: 13 November 2009 - 02:57 PM

[Avalon]

^^^ Hey, McDonald's has had a double cheeseburger on their dollar menu for ages and they don't seem to be having a problem with it...

This post has been edited by Avalon: 14 November 2009 - 08:39 PM

[Nick]

Avalon, on Nov 14 2009, 08:38 PM, said:

^^^ Hey, McDonald's has had a double cheeseburger on their dollar menu for ages and they don't seem to be having a problem with it...

Actually, they changed it to the McDouble. Which is a double cheeseburger w/ a single slice of cheese.

The proper double cheeseburger went up to $1.19. Apparently the slice of cheese is worth 19 cents.

This post has been edited by Nick: 14 November 2009 - 08:46 PM

[Analog Kid]

I had a Whopper & a small Hi-C fruit punch drink while in New York City this evening. I rarely eat Whoppers, but I do like them.