No One Manipulates Prices Better Than The Fast-Food Industry

Jeremie Bohbot

LOS ANGELES , May 9, 2013 (Off The Menu) – No one is better at price manipulation than the fast-food industry. That’s not an insult. That’s a compliment at the highest level.

I recently saw an example of this manipulation at my local Jack in the Box. I saw a poster on their window offering two Jumbo Jack burgers with cheese for $4. It sounded great to me, so I went there a few days later. But here’s what I noticed when placing my order at the drive thru:

Ordering one Jumbo Jack burger with cheese cost $1.79.

So let’s do some quick basic math:

The promotion Jack in the Box was offering cost me $4.37 when you factor in tax.

But if I just paid the standard price for the same food, it would’ve cost me $3.91 with tax.

So I’ve just spent 46 cents more for the same food.

What a promotion!

And I mean that sincerely. This is brilliant, brilliant marketing by Jack in the Box. I don’t go there all that much because there’s not a location that’s very convenient for me near my home. But that promotion led me to drive a little more and spend more money than I would’ve spent without the promotion.

And at the expense of insulting my fellow consumers: Most customers aren’t going to take the time to figure this out. Most of them won’t even think about it. They’ll see the poster and immediately assume it’s a great deal.

Del Taco is doing the same thing with its new Buck and Under menu, featuring a number of items ranging from 50 cents to $1. Looks good, sounds cheap, but guess what? A lot of the items on this menu were recently priced lower than they are now. So people are going to spend more and think they’re paying less.

Price manipulation?

I like to think of it more as good marketing.

Nevin Barich is the Food & Beverage Analyst for IndustryIntel. He just spent extra money on a Jack in the Box promotion…and may very well do it again. He can be reached at n.barich@industryintel.com

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