Days of Change

Six Dollars | June 19, 2014

People are not willing to pay 10 cents more for a Big Mac.

The proposition was brought up a couple of years ago with the push to increase wages for fast food workers, one job that can’t be outsourced. The idea was that a few cents added to a signature sandwich could fund for a certain increase in pay. The reality is that price points are based on psychological barriers. When a product goes from $3.99 to $4.00, people see it as a dollar more, not 1 cent.

I’ve noticed this month that Little Caesar’s and Subway have raised their low-priced items from $5 to $6 after almost a decade of keeping them at one price point. It is a 20% increase in price and is likely required to continue making a profit on selling these loss leaders. It will also hurt them in the short-term as people turn to lower priced alternatives. McDonald’s, Burger King and others have shrinking “dollar” items. In fact, McDonald’s is selling a Big Mac with fries and a drink for the price of a Big Mac alone.

For me, the six-dollar barrier opens up the menu options of more local restaurants. Today, I bought a $7 sub at a local deli rather than a $6-$7 Subway sandwich. For that, I got a large amount of meat on a pretty substantial roll. With the price of a whole pizza today, I may start going to places that sell by the slice unless I have a few people over.


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1 Comment

  1. Bon appétit!,

    Comment by Mary — June 19, 2014 @ 11:36 pm

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