How do fast food chains maintain similar prices in high COL cities? (buy, company)

[GoodHombre]

I'm not exactly sure whether Chick fil A/McDonald's charge exactly the same price in the high cost of living areas like Manhattan or SoCal, but at least they seem to charge similar prices?

Does that mean their profits in the high cost of living areas lower?

[Quietude]

Most chains have a wide range of pricing, from competitive suburban to gate side airport. Most people don't really notice.

And, it tells you something about their unit profits.

[Malloric]

They don't.

[mathjak107]

Manhattan McDonald’s tend to drop out of a lot of special offers and don’t take part

[Quietude]

Originally Posted by mathjak107

Manhattan McDonald’s tend to drop out of a lot of special offers and don’t take part

That, too. The high-COL and captive-market stores tend to price everything at the maximum allowed pricing and avoid any discounts or promotions that aren't fully subsidized by the corporation. Most people just don't notice that they're paying $10 for a combo at an airport when they usually pay $5-6 at a suburban mall store.

[GoodHombre]

Originally Posted by Quietude

That, too. The high-COL and captive-market stores tend to price everything at the maximum allowed pricing and avoid any discounts or promotions that aren't fully subsidized by the corporation. Most people just don't notice that they're paying $10 for a combo at an airport when they usually pay $5-6 at a suburban mall store.

I checked Chipotle price online(Los Angeles vs Tulsa), the prices seemed to be the same.

[Quietude]

Originally Posted by GoodHombre

I checked Chipotle price online(Los Angeles vs Tulsa), the prices seemed to be the same.

If you're checking comparable markets, they would be. It's not necessarily that a McD's in one city center would price differently than one in another, even if they have varying COLs. That's part of what being a chain represents.

But most people aren't aware that stores have leeway within an approved range, and can opt out of promotions and the like, meaning there is variability in pricing.

[mathjak107]

Here is the answer from McDonald’s retired purchasing director Richard widman

Prices will vary based on the cost of (mostly) labor, taxes, or local fees. A city or mall with high taxes, HOA, or common area fees will have to charge more. A local minimum wage higher than the one outside the city or across the river in another state might affect pricing. There isn't really a consideration for local community income or things of that nature.

Company stores in a market will maintain the same prices across their region, although in some cases what seems like the same market to some might actually cross regional boundaries and have slight variations, especially in promotions whee TV markets cross boundaries (hence the phrase in promotions: "at participating stores".

On the other hand, Franchisees, which make up the bulk of the stores, set their own prices. McDonald's can't dictate to them, although in operations and especially when I was purchasing director, we worked hard to make sure the reason for increases was not waste and theft...

Due to anti-monopoly and anti-collusion laws, Franchisees make sure they vary their pricing slightly from other local Franchisees, maybe taking a nickle off cokes and adding it to fries so they won't get in trouble for setting prices with their fellow Franchisees.

[tijlover]

I worked at a Long Term Care/Rehab facility and our facility was the biggest money maker of the other 9 facilities in Las Vegas. Our facility helped to subsidize the other facilities that weren't making as much money or were money losers.

Isn't that a similar system to fast food chains?

[athena53]

Originally Posted by Quietude

Most people just don't notice that they're paying $10 for a combo at an airport when they usually pay $5-6 at a suburban mall store.

Huh? I go into sticker shock every time I buy food in an airport!