McDonald’s Targets Poorer Suburbs
McDonald’s is lifting prices in poorer suburbs because it believes patrons in those areas are more likely to accept the higher charges, while those in affluent areas would complain.
Costs were previously based on restaurant overheads and ingredient prices. But the multi-national fast-food chain is using socioeconomic factors to determine charges under a new “demand-based pricing” scheme.
Corporate documents obtained by The Courier-Mail shows McDonald’s Australia has identified an “opportunity to introduce more aggressive price increases” in 73 Queensland outlets.
Some of the stores include Logan Central, Loganholme, Arana Hills, Gympie, Ipswich City, Labrador, Inala Plaza and Morayfield. McDonald’s, which yesterday confirmed the price strategy, says “the price refinement takes into account individual factors that relate to each store…”
A McDonald’s franchisee, who asked to remain anonymous, said the biggest price rises were concentrated in low-income areas. “In general, the poorer suburbs will pay more,” the franchisee said.
The document says the system’s objective is for individual stores “to maximise the potential for a price rise” while minimising the risk that consumers will go elsewhere or choose a cheaper meal. The biggest price rise will be for children’s Happy Meals, which will increase by 16.5 per cent from $4.25 to $4.95, at all locations.
Other items will rise in two stages by between 1.8 per cent and 3.3 per cent, depending on the location of the restaurant. The first stage has already been implemented, while the second stage will occur in May.
McDonald’s corporate communications manager Bronwyn Stubbs said the company developed prices according to “established research techniques” and these were recommended for company-owned restaurants. The most recent “refinement”, which considered price factors relating to each store, was to align with the company’s “global practice”.
Choice spokeman, Christopher Zinn, said he was surprised McDonald’s would raise prices during tough times. Mr Zinn said families looking for cheap meals should consider alternatives to fast food.
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