Every day tens of millions of people around the world eat at McDonald’s. Perhaps your one of them. If you’re anything like me than at some point while munching down on their signature Chicken McNuggets while slurping on Coca-Cola (that for some reason just tastes better than anywhere else) you may have wondered “How is this so cheap?”. Wonder no more – we’ve got the answer for you.
Let’s be clear – McDonald’s makes a lot of money, even with their low prices. In fact, according to McDonald’s themselves the company had systemwide sales of over 100 billion dollars in 2019 alone. So what are the secrets to the company’s success?
First there are the high profit margin items. The company sells their sodas at a markup of over 1000% and coffees are marked up over 2000%! The breakfast items reap good returns for the burger chain as well. I mean think about it – how much would an egg, a slice of American cheese and an english muffin cost you if you went to the grocer? Probably not more than 75 cents, maybe a dollar if that.
Then comes the company’s supply chains. McDonald’s gets great deals from their food suppliers because they order more than anybody else does. For example, back when McDonalds began offering apples on their menu – they immediately became the world’s largest buyer and seller of apples according to Bloomberg. When you buy the most in the world, you better believe you are getting a great price. Those savings are then passed on to the customer, making your meal cheaper.
Then there are labor costs. It isn’t secret information that McDonald’s is not the highest paying job in the world. While it is honorable work, it probably isn’t enough money to properly feed a family on. Keeping labor costs down helps McDonald’s keep their prices low. Over the past few years you may have even noticed self-service machines popping up in your local Mickey D’s. This is yet another effort to lower operating costs in order to maintain low prices on food.
So thank you McDonald’s for keeping us fed even when the bank account is running dry, The low prices, consistent food quality and special promotional items keep customers coming back for more. Speaking of special promotional items, the company brought back the fan-favorite McRib last month. You can read all about the pork sandwich with a cult following here.