In normal times, restaurants serving normal food and charging normal prices hope to keep food costs hovering around 30 percent of their menu prices.
But these aren't normal times, and fast food chains long ago gave up the 30 percent rule on some items. Although McDonald's doesn't reveal its wholesale food costs, it's safe to say that the McDouble -- a double patty burger with one slice of cheese that retails for 99 cents -- is being sold for 50 or even 60 percent of costs. The chain was already forced to take the regular double cheeseburger off the dollar menu because it was costing too much.
As ABC News reported last month,
Since 2006, the price of bread has risen 24 percent, beef 4.4 percent,Now, fast-casual
cheese 6.6 percent, and condiments, from ketchup to mustard to pickles,
3 percent. Rising food prices add a dime to the wholesale cost of every
chains such as T.G.I.Friday's and Applebee's are also going for broke to keep customers.
New York Times reports, some items on the T.G.I.Fridays' $5 lunch menu
cost up to $4 wholesale. T.G.I.Fridays franchisee owner Ross Farro
Within days of the promotion's start in lateRestaurants are betting they can get
April, many franchisees began complaining to the chain's parent
company, Carlson Restaurants Worldwide ... Mr. Farro said
he and some other franchisees put away the $5 menu inserts at night to
stop the bleeding... "We're very upset that we're getting
hammered here. We're giving the food away," Mr. Farro said.
customers in the door with the specials and then sell them the items
with really high margins such as drinks, desserts and appetizers. But T.G.I.Fridays is also biting into the profits on those items, offering loyal customers coupons for
free appetizers and half-off alcoholic drinks. Meanwhile, other customers
are coming in and, as one analyst put it, "they're not buying the soda,
they're stiffing the waiter on the tip, they're drinking water and
Other chains aren't far behind. Applebee's has its two entrees, appetizer and dessert special for $20, Chicago Uno is running a pizza, salad and dessert deal for $9. It may not be a great time to own a restaurant but if you like a bargain, it's a great time to eat.