BURGER BOOST; FAST-FOOD CHAINS TAKING BIGGER BITE OF CUSTOMERS' CASH.Byline: Jim Kirk Chicago Tribune Chicago Tribune Daily newspaper published in Chicago. The Tribune is one of the leading U.S. newspapers and long has been the dominant voice of the Midwest. Founded in 1847, it was bought in 1855 by six partners, including Joseph Medill (1823–99), who made the paper After being mired mire n. 1. An area of wet, soggy, muddy ground; a bog. 2. Deep slimy soil or mud. 3. A disadvantageous or difficult condition or situation: the mire of poverty. v. in one of retail's most vicious price wars for most of the 1990s, the nation's top fast-food chains are quietly attaching price increases to some of their menu boards, signaling the first significant price movement since the beginning of the decade, industry watchers say. According to according to prep. 1. As stated or indicated by; on the authority of: according to historians. 2. In keeping with: according to instructions. 3. the National Restaurant Association, menu prices at the nation's fast-food outlets are rising at a rate of 3.1 percent this year. That's the first time in seven years that fast-food prices are outstripping the inflation rate, the association says. But for the industry, it's risky business. The message to fast-food consumers continues to be value: The entry-level price to get them in the door is still 99 cents for McDonald's Big Mac and Burger King's Big King, and a steep price increase could chase customers to a competitor. ``It's kind of one of those things (where) you want to know who is going to blink blink the involuntary movement of one or both eyelids of both eyes simultaneously. The frequency varies between species. Cats blink the least, with the possible exception of owls. In birds it is the lower eyelid which is moved up to meet the upper lid. first,'' said Dean Haskell, an analyst who watches McDonald's for Everen Securities. So the increases are showing up in the cost of combination meals, which were the battlefield for the deep-discounting wars in the early '90s. Roughly 60 percent of fast-food sales are now coming through combination meals, which usually involve a sandwich, a side order and a soft drink. A price increase on components of those meals is almost negligible to consumers, and stores that are raising their prices are doing so by perhaps 50 cents or less. And analysts are watching closely whether the current flirtation with price increases has any long-term legs to it. ``McDonald's has not demonstrated an ability to compete on any basis other than price,'' said Damon Brundage, an analyst with NatWest Securities. ``It certainly hasn't been quality.'' The $140 billion fast-food market's pricing strategies There are many ways in which the price of a product can be determined. The following are the foremost strategies that businesses are likely to use. Competition-based pricing Setting the price based upon prices of the similar competitor products. also may be reflecting a confluence confluence /con·flu·ence/ (kon´floo-ins) 1. a running together; a meeting of streams.con´fluent 2. in embryology, the flowing of cells, a component process of gastrulation. of economic issues, analysts say. Some believe the companies are feeling the pinch from increased labor costs, due both to a tight labor market labor market A place where labor is exchanged for wages; an LM is defined by geography, education and technical expertise, occupation, licensure or certification requirements, and job experience and last month's hike in the minimum wage to $5.15 per hour. But there also are signs that consumers are finally willing to spend more in a booming economy. Cereal and tobacco companies, both of which also took sharp price cuts in the early '90s, have been raising their prices again. Besides the economy, fast-food industry experts also say Oak Brook, Ill.-based McDonald's new regional strategy may be fueling the industry's fire by giving more pricing leeway lee·way n. 1. The drift of a ship or an aircraft to leeward of the course being steered. 2. A margin of freedom or variation, as of activity, time, or expenditure; latitude. See Synonyms at room. to franchisees, who have complained fiercely about their sluggish profit margins. ``A lot of it has to do with predicting McDonald's direction,'' said Lawrence Jaro, chief executive officer of Burger King's second-largest franchisee. ``They have been so focused on giving food away, and now they are focused on regionalizing their business. It looks like they will try to develop regional products that will sell in the marketplace and sell at a better profit.'' But the recent price hikes are sporadic, depending on the market conditions, and they are well-hidden. ``What we're seeing is `price creeping creeping 1. gradual progression of a lesion or tissue growth. 2. prostrate growth pattern of a plant, e.g. c. buttercup (Ranunculus repens), c. caustic (Euphorbia drummondii), c. charlie (Glechoma hederacea), c. ,' '' said Ron Paul, president of Chicago-based Technomic Inc. ``The profitability is coming from price increases on the add-on items, like potatoes. But the focus is still on the 99-cent burgers. They won't be able to get away from that any time soon.'' THE COST OF FAST FOOD From burgers to tacos to cold cut sandwiches, three-and-a-quarter is about the going rate for a fast-food combo, according to an informal survey of area restaurants. RESTAURANT COMBO MEAL SANDWICH SIDE SODA COST McDonald's Big Mac Large fries 21 oz. $3.24 20932 Devonshire Blvd., Chatsworth Burger King Whopper Whopper - WarGames Med. fries 22 oz. $3.24 8516 Reseda Blvd., Northridge Jack-In-the-Box Jumbo jum·bo n. pl. jum·bos An unusually large person, animal, or thing. adj. Unusually large: jumbo shrimp; a jumbo jet. Jack Med. fries 20 oz.$3.22 22664 Ventura Blvd., Woodland Hills Carl's Jr. Famous Star Med. fries 21 oz. $3.22 15045 Ventura Blvd., Sherman Oaks Taco Bell Taco Bell Corp., a subsidiary of Yum! Brands, Inc., is a Mexican-style quick service restaurant chain based in Irvine, California, United States. The restaurant has locations primarily in the United States and Canada, but also operates outlets in several other markets. 3 hard or soft tacos 20 oz. $3.22 14557 Vanowen Blvd., Van Nuys Subway Sandwiches 6-inch Small bag 20 oz. $3.50 12727 Ventura Blvd., cold cuts of chips Studio City CAPTION(S): Photo, Chart Photo: (Color) No caption (McDonald's hamburger, french fries French fry n. A thin strip of potato fried in deep fat. Often used in the plural. and soft drink) David R. Crane/Daily News Chart: (Color) THE COST OF FAST FOOD (See text) Gregg Miller/Daily News |
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