Do individual franchise owners sign a contract with the parent company, allowing them to set prices? If so Burger King franchise owners have no beef.hehehe
Carl’s Jr/Hardees started this by creating the Big Carl and stacking it straight up against the Big Mac for only $2.
I tried it and, truth be told, it is a Super Star with Thousand Island — get it without the dressing.
I really don’t understand how they are losing money, if they move enough product they should be able to cover their overhead if they are selling their product above material cost.
I guess they never heard of “loss leaders” They make several hundred percent profit on fries and sodas... If it brings 10 to 15% more customers and these customers purchase any other product along with the burger, they will make a considerable amount more money overall... so, confused.
They more than make up for it when they ask, ‘Want fries with that?” ...
The only reason I eat at BK is the $1 double cheeseburger—and I eat it with fries and a large Coke, so they aren’t losing money on the deal.
Bump the price up to $1.25 and I’ll probably go elsewhere.
Since Goldman Sachs owns the majority of BK, and since they control the WH....we need a Beer Summit.
A BK double cheeseburger for $1.00 sounds like a terrific deal. I’ve been missing out.
Okay....so just thin the serving of fries and water-down the coke formula. You get your 10 cents back.
I’ve got some background in franchising.
The franchisor usually receives royalties on gross sales. His incentive is to maximize them, with no immediate incentive to give a hoot about whether the franchisee is able to make a profit at the price advertised.
Of course a smart franchisor realizes he’ll be killing the auriferous waterfowl if he cuts prices too much. But not all franchisors are that smart.
OTOH, not all franchisees are smart enough to realize how the loss leader and volume issues others have mentioned should impact their pricing strategy. I worked a deal once where franchisees could make 20% on a new source of business. New money they didn’t have before that also helped increase their traditional source sales! Most of them insisted on marking their cost up 40% or more, and pretty quickly all of the new business was lost.