The Golden Arches want more $$$$$$$$$$$$$$$$$
Posted: Thu Feb 26, 2009 5:23 amMcDonald's is lifting prices in poorer suburbsArticle from: Font size: Decrease Increase Email article: Email Print article: Print Submit comment: Submit comment Frances Stewart
February 25, 2009 11:25pm
McDONALD'S is lifting prices in poorer suburbs because it believes consumers in these areas are more likely to accept the higher charges.
The cost of menu items was previously based on restaurant overheads and ingredient prices.
But the multinational fast-food chain is now using socio-economic factors to determine charges under a new "demand-based pricing" scheme.
Corporate documents obtained by The Advertiser reveal McDonald's Australia has identified an "opportunity to introduce more aggressive price increases" at 13 of South Australia's 47 outlets.
McDonald's, which yesterday confirmed the new pricing strategy, says the price "refinement takes into consideration individual factors that relate to each store. . ."
The stores to charge the highest prices are at Arndale, Camden Park, Collinswood, Elizabeth, Enfield, Fulham Gardens, Hollywood Plaza, both outlets at Marion, Paralowie, Port Lincoln, Salisbury and West Tce in the city.
A McDonald's franchisee, who asked to remain anonymous, said the biggest price rises were concentrated in low-income areas.
"In general, the poorer suburbs will pay more," the franchisee said.
"In essence, areas that the franchisor thinks will pay more for our products, will have to."
The document says the new system's objective is for individual stores "to maximise the potential for a price rise" while minimising the risk consumers will go elsewhere or choose a cheaper meal.
The biggest price rise will be for children's Happy Meals, which will increase by 16.5 per cent from $4.25 to $4.95, at all locations.
Other items will rise in two stages by between 1.8 per cent and 3.3 per cent, depending on the location of the restaurant.
The first stage has already been implemented at most stores, while the second stage will occur in May.
McDonald's corporate communications manager Bronwyn Stubbs developed prices according to "established research techniques" and these were recommended for company-owned restaurants. The most recent "refinement", which considered price factors relating to each store, was to align with the company's "global practice".
The new system means McDonald's three city locations – all within 1.5km of each other – will have three pricing structures.
West Tce will have higher prices than Hindley St, while Rundle Mall's prices will be lowest.
At the Rundle Mall outlet yesterday, Lucy Russell, 18, of Beaumont, did not know the price of meals varied.
"I just assumed they were all the same price," she said.
"I think it's actually a bit dodgy to have different prices in different places."
Choice spokesman Christopher Zinn said it was a "fascinating insight" int McDonald's corporate culture that "they believe they can get unpalatable price rises through by doing it in two stages".
Mr Zinn said families looking for cheap meals should consider alternatives to fast food.
"The least well off are not always the most price conscious," he said. "But fast-food meals are not necessarily a cheap option."
The price rise comes as McDonald's enjoys growing profits and market share. Asia-Pacific revenue rose 10.2 per cent in 2008, and 39 new stores are set to open in Australia this year
February 25, 2009 11:25pm
McDONALD'S is lifting prices in poorer suburbs because it believes consumers in these areas are more likely to accept the higher charges.
The cost of menu items was previously based on restaurant overheads and ingredient prices.
But the multinational fast-food chain is now using socio-economic factors to determine charges under a new "demand-based pricing" scheme.
Corporate documents obtained by The Advertiser reveal McDonald's Australia has identified an "opportunity to introduce more aggressive price increases" at 13 of South Australia's 47 outlets.
McDonald's, which yesterday confirmed the new pricing strategy, says the price "refinement takes into consideration individual factors that relate to each store. . ."
The stores to charge the highest prices are at Arndale, Camden Park, Collinswood, Elizabeth, Enfield, Fulham Gardens, Hollywood Plaza, both outlets at Marion, Paralowie, Port Lincoln, Salisbury and West Tce in the city.
A McDonald's franchisee, who asked to remain anonymous, said the biggest price rises were concentrated in low-income areas.
"In general, the poorer suburbs will pay more," the franchisee said.
"In essence, areas that the franchisor thinks will pay more for our products, will have to."
The document says the new system's objective is for individual stores "to maximise the potential for a price rise" while minimising the risk consumers will go elsewhere or choose a cheaper meal.
The biggest price rise will be for children's Happy Meals, which will increase by 16.5 per cent from $4.25 to $4.95, at all locations.
Other items will rise in two stages by between 1.8 per cent and 3.3 per cent, depending on the location of the restaurant.
The first stage has already been implemented at most stores, while the second stage will occur in May.
McDonald's corporate communications manager Bronwyn Stubbs developed prices according to "established research techniques" and these were recommended for company-owned restaurants. The most recent "refinement", which considered price factors relating to each store, was to align with the company's "global practice".
The new system means McDonald's three city locations – all within 1.5km of each other – will have three pricing structures.
West Tce will have higher prices than Hindley St, while Rundle Mall's prices will be lowest.
At the Rundle Mall outlet yesterday, Lucy Russell, 18, of Beaumont, did not know the price of meals varied.
"I just assumed they were all the same price," she said.
"I think it's actually a bit dodgy to have different prices in different places."
Choice spokesman Christopher Zinn said it was a "fascinating insight" int McDonald's corporate culture that "they believe they can get unpalatable price rises through by doing it in two stages".
Mr Zinn said families looking for cheap meals should consider alternatives to fast food.
"The least well off are not always the most price conscious," he said. "But fast-food meals are not necessarily a cheap option."
The price rise comes as McDonald's enjoys growing profits and market share. Asia-Pacific revenue rose 10.2 per cent in 2008, and 39 new stores are set to open in Australia this year
