Cost of living5:15Why don’t McDonald’s McNuggets cost the same everywhere?
Siva Canjeevaram has lived in Canada for 17 years, but recently noticed that her son’s favorite food doesn’t have the same price at all McDonald’s.
After a busy week working as a landscaper in Calgary, Canjeevaram ended up taking his family out for dinner twice recently, at two different McDonald’s locations. The first night she paid $13.59 for a 20 piece Chicken McNuggets. The next night, she paid $11.79.
“I was so surprised,” Canjeevaram said. “Why isn’t the price of McNuggets the same in different parts of town?”
To determine if this was an anomaly or a trend, Cost of living used the McDonald’s mobile app to compare the price of 20 Chicken McNuggets at each McDonald’s restaurant in Calgary. CBC queued up the order in the app, but changed locations before finalizing it to see the prices for the different locations (without buying hundreds of nuggets in the process).
This data was then plugged into a map to illustrate how much the price of McNuggets can vary within a city. In Calgary, they ranged from $11.69 to $16.39, and in some cases, McDonald’s restaurants located a few miles away had significant price differences.
You can also see how McDonald’s menu prices change from location to location within cities across Canada using the McDonald’s mobile app.
fast food index
It’s a similar story south of the border, according to Riley Walz.
The 20-year-old software engineer from San Francisco created the fast food index, an interactive online map showing the price of each Big Mac in the United States. By collecting data from the menus on the McDonald’s mobile app, Walz found that there were 109 different prices for the popular burger.
“The most expensive Big Mac in America is in a town called Lee in Massachusetts and it costs $7.89. [US]” Walz said. “But the weird thing is that directly across the rest stop across the road, less than a few hundred away, is another McDonald’s selling Big Macs for $1.50 cheaper.”
Walz assumed that the most expensive Big Macs would be in neighborhoods where the median income was higher. But “there really wasn’t a correlation,” he said.
“Certain neighborhoods in Manhattan are probably the wealthiest neighborhoods in New York City. But those weren’t necessarily the most expensive stores because the people who live in the area might not be the people who eat at those restaurants all the time.”
In Calgary, the most expensive 20-piece Chicken McNuggets were found downtown, in newer urban developments, and within Walmart locations.
Most McDonald’s are franchises.
When American salesman Ray Kroc bought McDonald’s in 1961, he came up with the slogan: “In business for himself, but not by himself.” As of 2023, the fast food giant has more than 38,000 locations, making it the largest franchise in the world.
McDonald’s did not respond to multiple requests for an interview or information, but about 85 percent of the 1,400 restaurants across Canada They are independently owned and operated. According to the company’s website, franchises “have the ability to set their own prices.”
In an email, Kenny Chan of the Canadian Franchise Association said that “franchisors generally do not set prices at franchisee locations.”
Franchisees are licensed to use the trademarks, intellectual property, and operating systems of franchisors, such as McDonald’s. But as independent business owners, Chan said franchisees have “decision-making control over how to run their own businesses.”
Scouting the competition
When deciding how to price their menu items, Chan said franchise owners look at many factors that could influence their profitability, such as rent, supplies and labor.
They also pay attention to menu prices at similar fast-food chains, according to the owner of Calgary’s first Wayback Burgers franchise. Before Maulik Shukla opened his restaurant in August 2022 and set his menu prices, he researched how much his local competitors, Five Guys and Fatburger, charged for their burgers and fries.
“I’ve made my prices a little lower because I’m new to the market,” Shukla said.
However, there are situations in which franchises do not need to evaluate the competition. Like when they’re the “only game in town,” said restaurant consultant David Hopkins.
“If you’re on a highway and you’re at a gas station… then supply and demand are completely in your favor,” said Hopkins, president of The Fifteen Group in Toronto.
When it comes to menu pricing, Hopkins says it’s all about knowing your customers and what they’re willing to pay.
He said fast food chains like McDonald’s use data analysis and data mining to help franchisees figure out “what the market will bear.”
“It’s not a franchise per se, but the first time I had a coffee from Starbucks in Niagara Falls, I was absolutely shocked at the price. It was something like 40 percent more for the same coffee that I was used to paying in Toronto. But that’s just the market, the tourist market, and they know they can charge more. And they do.”
With inflation still on the rise, Siva Canjeevaram said he has become more sensitive to how much money he spends on certain things, like eating out.
And now that Canjeevaram knows that 20 McNuggets will cost you nearly five dollars more at one Calgary McDonald’s than another, he’s been avoiding the more expensive places.
“Every dollar seems to matter now,” he said.