Thursday, November 19, 2009

Gimme A Double Cheeseburger

There’s a fight going on between the second-largest hamburger chain in the world - Burger King - and the company’s franchise owners, who control 90% of the chain’s 12 thousand locations.

It’s all over the cost of a burger.

The franchise owners are suing the King over its one-dollar double cheeseburger promotion, saying they’re losing money on every one they sell. The franchisees don’t want Burger King to have total control over where they set their prices on menu items.

The dollar-deal went nationwide about a month ago, even though the franchise owners had twice rejected the deal because of the expense involved. Burger King says its research shows the dollar double cheeseburger deal will draw more people into the restaurants, and they’ll spend more money.

Franchise owners say the math just doesn’t work.

So how much does it really cost to make a double cheeseburger? According to the lawsuit the franchisees filed, and franchise owner Dan Fitzpatrick of South Bend, Indiana, it’s $1.10. If you add up the cost of the meat, the bun, the cheese, and the other toppings, it’s about 55 cents. Half the total. Fitzpatrick says the other half covers typical Burger King expenses, like employee wages, rent, royalties, equipment, advertising, and the other standard costs of doing business.

When Burger King introduced the dollar double cheeseburger, they were hoping it would lure more people to come in and eat there. They had hopes it would boost business by 20%.

You’ve seen the ads on TV….fast-food restaurants are slashing prices to try and get us to come back. Even the national burger chain headquartered here, in Sauk City - Culvers - has just started advertising a four-dollar meal deal. It seems everybody from the number-one chain, McDonalds, to the smallest local outfits, are advertising some sort of low-cost deal to drum up business.

But a fast-food analyst for Deutsche Bank told the Associated Press that as much as half the gain in business from increased traffic could be lost, because we’re simply spending less when we order food.

The poor economy has hit the fast-food business as hard as every other kind of business.

If the fast-food industry had to rely on people like me for business, they’d be broke. I’ll stop at a fast-food place two or three times a month at most. I’ve tried the pricey new Angus third-pounder at McDonalds, and I like it a lot. But for my money, the butter-burgers at Culvers are very hard to beat.

By the time the Burger King suit has wended its way through the federal court system, the fate of the dollar double cheeseburger will long since have been determined. But it’s interesting for me to learn that the actual cost of the product, all told, is a buck-ten. I thought it would have been higher.

I may stop in and try one of those dollar double cheeseburgers…..before the promotion ends!

No comments:

Post a Comment