Late last year, a man in Idaho posted a video on TikTok complaining about the price of his $16 McDonald’s order.
“I get there’s a labor shortage,” Christopher Olive said on camera back then. “I get there’s wage increases and a number of other things, but $16? $16 for a burger, a large fry and a drink? It’s just crazy!”
The post has resurfaced in recent weeks, with folks around the country pointing to it as an example of the current state of financial affairs in the country (even though it’s not technically current). The fact that the video is over a year old is a testament to the way people feel and have been feeling about the economy.
“When people look at freedom and being able to do what they want, going out to eat is something that they find very valuable,” explained David Klyman, a financial strategist at Klyman Financial. “In a way, the quintessentially American freedom of going out to restaurants is getting crushed because of the price of things. Even where people thought they could get a bargain, like at McDonald’s, prices are going up.”
But there’s one important factor to consider: That $16 meal wouldn’t necessarily cost $16 at all McDonald’s locations. If you’ve ever wondered why prices fluctuate wildly from one franchise to another, we got the answers for you.
McDonald’s prices vary depending on your location
The truth is, that same McDonald’s order would cost less than $16 in other parts of the country. (And in some places, it may cost more.) But why would some locations charge different amounts than others?
After indulging in a variety of McDonald’s signature sandwiches in the New York City area and noticing the price differences between them, British marketing executive Sacha Fournier created McCheapest.com as a way to basically track the cost of a Big Mac across the United States.
At the moment, according to the site, the cheapest Big Mac in the country is being sold in Oklahoma for $3.49. The most expensive Big Mac in the U.S. will run you $8.09 in Massachusetts. That’s more than double the price of Oklahoma’s.
“The price of the items sold at McDonald’s have to do with inflation but also commercial property prices, gas prices, interest rates, car prices, health insurance cost, flight costs since you have to fly foods around the country, and more,” Klyman explained.
Operating the same business across state lines will clearly incur different costs based on the minimum wage payments that folks are legally entitled to in an area, rent rates, what area competitors are selling their goods for and more. But it seems that, even when accounting for those differences, prices don’t match up.
It’s important to note that, according to the company itself, 90% of McDonald’s restaurants are “independently owned and operated by franchisees who have the ability to set their own prices.”
Every shop founder therefore has the right to price its offerings according to their own calculations, wants and needs. As a result, it isn’t simple to analyze the reasons behind price differences when it comes to food items at McDonald’s sold across locations.
Logic would have it that eateries operating in affluent areas would demand more money per meal, for example. But that doesn’t seem to be the case, at least according to software engineer Riley Walz, who also created an interactive map diving into the topic, this one called Fast Food Index.
“Certain neighborhoods in Manhattan are probably the richest neighborhoods in New York City,” Walz told CBC. “But those weren’t necessarily the most expensive stores because people that live in the area might not be the people that are eating at those restaurants all the time.”
Of course, when pricing out their menu, franchisees take particular note of inflation, given how much the phenomenon affects other portions of the business.
According to Klyman, what’s interesting is that the rate of price increase across the country when it comes to McDonald’s items is not the same as the rate of inflation.
“Inflation has gone down since last year, but the increase in prices hasn’t reverted,” explained the financial guru. If a Big Mac now costs an average $3 more because of inflation, the price of the food won’t decrease again once the economy stabilizes.
Are we doing this to ourselves?
It all leads to the question: Is there a single factor that accounts for the difference in prices of food items sold at McDonald’s across U.S. locations? According to Klyman, yes ― and it actually has to do with the consumer more than the business itself.
“It’s not often about the value of a burger but what people are willing to pay for that burger,” said the financial strategist.
Take Olive’s $16 meal, for example: Sure, as noted in his TikTok video, the consumer was shocked about the price tag attached to it. However, he ended up parting ways with that money. Whether or not he considered the burger to be steeply priced, he was willing to pay for the upcharge.
“What you can do as a consumer is do research and, perhaps, support local stores,” Klyman noted. “Giant global chains are sometimes not being honest and bringing up their price 200% even though their cost hasn’t gone up at that rate, so do your research, and you might find that local stores and restaurants won’t upcharge you as much.”
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