One of the major reasons for the increase in the price of the food was because of an increase in the price of some of its compliments, oil. It is no suprise that as the price of gas increased the price of everything else did as well. Gas is used in the trucks to transport all of the food that is kept in the store. Oil is used for more than producing gasoline. It is the heart of the food that clogs the arteries (pun intended). Wendy's had a choice. Increase the price to pay for oil, or cook the consumer's fries in old, dirty oil. Have you noticed a difference in you're fries?
If say, McDonalds trucks were all solar powered, then Wendy's would have had some major problems. Sure, there are some loyal always fresh never frozen fanatics that sneer at the Big Mac eaters, but the majority of consumers would likely switch to McDonalds rather than pay that extra 5 cents for some fries. This is because McDonalds is a substitute. Luckily, the increase in the price of gasoline was a problem for everyone.
So the next time you wonder why you just got cahrged an extra 30 cents for your "value" frosty, thank the oil companies.
I for one am one of those people who switched from Wendy's to McDonald's because of Wendy's value menu price increase. Everyone knows that McDonald's is the largest fast food chain in the world employing over 447,000 people. (http://ezinearticles.com/?Fast-Food-Market-Forecast---The-Subway-Example-of-Strategic-Product-Positioning&id=735770)
ReplyDeleteThis being said, I like Wendy's food way better than McDonald's. However it seems these days that saving a few cents means a lot more especially if you wanted to buy several things off of the dollar or value menu.
McDonald's seems to be doing quite well under the circumstances of the economy. They haven't raised any prices and they seem to be raking in just as much in the money department. This shows that consumers are willing to get a lousier version of food for less money. Whereas Wendy's is failing because of their price increase.
I agree that the price of oil has been the cause of price increases all over the country in every aspect of the consumer market. And yes, people will be willing to make the switch to McDonald's over Wendy's because of that.
Good thought! I never one correlated the price of oil as a compliment to food such as Wendy's. But the more I think of this the more it sounds correct. As the price of oil increases, the price of gas increases. Thus, with people paying more for gas they are going to be spending less of their money elsewhere. Because short term change in price of gasoline is inelastic, money being spent of fast food or food in general, in my life especially would be scaled down.
ReplyDeleteI think that the rise in the price of oil affected McDonald's as much as it did Wendy's. The only difference is the way that both of the places chose to deal with them. McDonald's, instead of raising their prices, jsut made changes to their sandwiches. For example, they raised the price of the double cheeseburger by 30 cents but added the McDouble to the dollar menu. The only difference between these is the McDouble has one piece of cheese instead of two. Also at some McDonald's they've switched from the original 2 apple pies for a dollar to just one apple pie for a dollar. So both places are affected by the change in the price of oil but they just deal with them differently.
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