Sunday, November 30, 2008

Sad News For The Broke And Hungry.

Considering my semi-health scare earlier this year, you'd think the last place I'd find myself is a scrip club McDonald's. But sure enough, with two kids and a wife who doesn't cook nearly as much as she used to, I've found myself eating my lunch out of a bag a bit too often of late. So, I suppose I should see this a somewhat of a deterrent. Either that, or a very stark reminder of the economic times we live in.
McDonald's Corp. (MCD) is set to bump its double cheeseburger from its dollar menu on Monday, moving it to $1.19 after its franchisees complained that the price of popular sandwich was hurting profit margins.

The world's largest restaurant company is replacing the double cheeseburger on its dollar menu with the McDouble, a sandwich with two beef patties and just once slice of cheese, Greg Watson, vice president of marketing, said in a statement.

"These changes will ensure we continue to satisfy our customers' tastes and wallets," Watson said.

The McDouble is 6 cents cheaper to make than the double cheeseburger, but in tests, McDonald's has seen customers opt for the latter sandwich up to 70% of the time, J.P. Morgan analyst John Ivankoe said in a recent research note.

At that rate, the changes to the dollar menu could help boost the average McDonald's franchisee's cash flow about $20,000 a year to $310,000, Ivankoe said.

McDonald's shares rose 2.3% in recent trading to $56.78, and for the year, they were down 3.6%, the second-best performer in the Dow Jones Industrial Average.

As ingredient costs ticked up earlier this year, restaurant chains sought to save money by experimenting with new recipes for popular products. McDonald's top competitor, Burger King Holdings Inc. (BKC), has been testing Whopper Jr. sandwiches with smaller patties in some markets.
I suppose 19 extra cents isn't exactly breaking anyone's bank, but let's face it, the $1 price point is prolly what makes this item most attractive. I'm sure one of ya'll with an MBA could probably theorize on this better than me, but I'm willing to bet that longterm McDonald's will sell far fewer of these because most people will just order the replacement McDouble[1] sandwich (minus one slice of cheese) out of spite.

Either way, one less reason to frequent the Golden Arches. Good for me!

And now, since I can't think of any better way to end such a post, here's my boy Dallas Penn's instant classic, the flick that made the Internets Celebrities, celebrities: "Ghetto Big Mac". Watch and learn.

Question: Do you think McDonald's sales will suffer as a result of such petty nickel and diming? Have you ever tried a Ghetto Big Mac?

McDonald's Raising Price Of Double Cheeseburger Dec. 1 [CNNMoney]

More Videos From Internets Celebrities

[1] What a cheesy name. Pun intended.

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