They’re outright accepting less customers in favor of those willing to pay higher prices.
That’s great for a quarter, maybe a year, maybe 5. At what point does it catch up and you’ve trained everyone to stop eating fast food because you wanted to charge more than people can dedicate to food?
They’re outright accepting less customers in favor of those willing to pay higher prices.
This is exactly it. I have seen folks saying we are entering a new kind of economy: a kind of “whale economy”. After seeing it work for mobile apps and games, other normal companies are wising up to the fact that your revenue will be the same if you charge 10 times what you were and lose 9/10 of your customers as a result… but your expenses will be lower. less labor, less equipment, less materials, less time. The 1/10 who stay and pay the high prices out themselves as “whales”, the people who probably have enough money to never care and will probably just keep spending even if the prices keep going up and up and up.
The majority of us are about to become low value customers… and therefore, not have easy access to common goods and services any longer. This will make perfect short term sense to each company doing this, but will promptly collapse what’s left of our economy into ruin.
Fast food is already almost as expensive as regular restaurant food… the only benefit is the drive through for those in a hurry travelling through town. If it gets any more expensive it will be easier to just phone in your order at a regular restaurant for pick up.
I cannot fathom how no one else sees this. They’re trading low-value customers for high-value customers. Sometimes this makes sense. I did it when I had a little PC repair business. Low-value customers were a PITA and didn’t make me any money, not worth my time.
But maybe they’re smarter than you and I? Lemmy tells me cheap fast food is a right, as if there’s no other choice. If that’s how people are thinking and acting, instead of shying away from fast food prices? Fuck 'em. Let them pay.
PC repair is a low volume, high touch, high skill business. If you set aside a single $100 customer for a $500 one, it can work since both exist.
Hamburgers of the Wendy’s grade are a volume and convenience game. For every thousand $4 customers, can they replace them with 667 $6 customers?
I’ve noticed an interesting phenomenon in the last couple years. The cheapest options and biggest chains ramped their prices much faster than the places a notch or two better. The gap has closed enough that suddenly those “notch or two better” places are more competitive than before-- if it will be $50 instead of $30 to take the family to Wendy’s, why not stretch to $65 for get Five Guys or a local place instead.
People are even less price sensitive at restaurants. They’ve been doing this longer than fast food has.
Last week I spent $21 on two California rolls and a miso soup. I felt scammed and won’t go back there.
I spent half an hour today searching my area for good lunch specials. Ended up getting a cup of soup and a scoop of chicken salad for $12.
I’ll have to travel about 20 minutes to another side of the city to try some lunch specials at a Chinese place and see if that’s any better.
This situation IS getting ridiculous enough that someone can come along with an actual good deal and make money on volume again. But in this decade that’s a radical, risky business plan.
Sushi is expensive in general. I can’t really comment on soup and chicken salad since I’m not much of a fan of either. I usually go for Chinese or Thai for the best deals. When fast food is charging $6 just for a burger, I’d rather pay $10 for Pad Thai. Yes it’s more expensive, but the value is much better.
I think we need to seperate the ability for a corporation to make decisions of its own free will from the notion of fairness and equity for a society which allowed a franchise like Wendy’s to be created. They’re giving many of their supporters the middle finger after thinking they found a winning lottery ticket.
I can understand being pissed off about it as someone who isn’t rich, but I also understand it’s a system I have no control over other than what I choose to buy myself. I won’t support Wendys if they want to choose profits over people. It’s sad to see more of the world turn into a heartless corporate hellhole.
I personally hope they got their numbers wrong and they fail.
Training is a great, important word here. There’s a huge lag between setting prices and having them affect your business. Most people will try a new place once, regardless of the price. The first time they go they’ll judge the price by the style of restaurant. It’s not until the second time they’ll factor the price into their decision. Companies only care about “training” when it goes the other way, when it’s a good reputation they can liquidate through enshittification.
When they’re on the downside of training all they think about is “MONEY NOW” while they’re effectively scamming their customers and slowly destroying their customer base.
There’s a hot chicken place near me that’s having exactly this problem. The downtown, novel location in the middle of the walking market (a tourist attraction) was a bit expensive, but good. They expanded out to the suburbs, kept the downtown prices, and no longer give sweet tea for free. And somehow they’re surprised that less than a year after opening they’re lucky to have three customers at once. I’ll give you a hint. You’re charging $10 for a chicken breast on a slice of wonder bread. Chicken used to be popular because it was cheap.
Compare to this 2005 Popeye’s commercial. 11 pieces of chicken for $10. Not a single breast. Look me in the eye and tell me prices have actually risen 11x in 20 years.
Alternate timeline: Surge priced fast-food becomes a status symbol. People buy used Wendy’s packaging in order to hide their homemade food and not be made fun of.
I agree it sucks. But I can understand the rationale. At peak times, if people try to go to Wendy’s, and it’s too busy, they go somewhere else. At this point the demand is higher than supply. Clearly increasing cost will create more profit.
Long term they are probably hoping that people decide to not all come in a peak times, and the peak is more spread out. This way lines are never long enough for people to just say fuck this and then leave. Less lost sales = more profit.
In reality I can see people just not going, so I agree with you that long term they see less sales. But honestly who really knows, people can be pretty irrational.
They’re outright accepting less customers in favor of those willing to pay higher prices.
That’s great for a quarter, maybe a year, maybe 5. At what point does it catch up and you’ve trained everyone to stop eating fast food because you wanted to charge more than people can dedicate to food?
This is exactly it. I have seen folks saying we are entering a new kind of economy: a kind of “whale economy”. After seeing it work for mobile apps and games, other normal companies are wising up to the fact that your revenue will be the same if you charge 10 times what you were and lose 9/10 of your customers as a result… but your expenses will be lower. less labor, less equipment, less materials, less time. The 1/10 who stay and pay the high prices out themselves as “whales”, the people who probably have enough money to never care and will probably just keep spending even if the prices keep going up and up and up.
The majority of us are about to become low value customers… and therefore, not have easy access to common goods and services any longer. This will make perfect short term sense to each company doing this, but will promptly collapse what’s left of our economy into ruin.
COVID and recent financial policies changed our economy from “charge what it costs + a reasonable profit margin” to “what’s it worth to you?”
Fast food is already almost as expensive as regular restaurant food… the only benefit is the drive through for those in a hurry travelling through town. If it gets any more expensive it will be easier to just phone in your order at a regular restaurant for pick up.
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deleted by creator
I cannot fathom how no one else sees this. They’re trading low-value customers for high-value customers. Sometimes this makes sense. I did it when I had a little PC repair business. Low-value customers were a PITA and didn’t make me any money, not worth my time.
But maybe they’re smarter than you and I? Lemmy tells me cheap fast food is a right, as if there’s no other choice. If that’s how people are thinking and acting, instead of shying away from fast food prices? Fuck 'em. Let them pay.
PC repair is a low volume, high touch, high skill business. If you set aside a single $100 customer for a $500 one, it can work since both exist.
Hamburgers of the Wendy’s grade are a volume and convenience game. For every thousand $4 customers, can they replace them with 667 $6 customers?
I’ve noticed an interesting phenomenon in the last couple years. The cheapest options and biggest chains ramped their prices much faster than the places a notch or two better. The gap has closed enough that suddenly those “notch or two better” places are more competitive than before-- if it will be $50 instead of $30 to take the family to Wendy’s, why not stretch to $65 for get Five Guys or a local place instead.
deleted by creator
Or I could just eat at a proper restaurant.
I hate to tell you this, but…
People are even less price sensitive at restaurants. They’ve been doing this longer than fast food has.
Last week I spent $21 on two California rolls and a miso soup. I felt scammed and won’t go back there.
I spent half an hour today searching my area for good lunch specials. Ended up getting a cup of soup and a scoop of chicken salad for $12.
I’ll have to travel about 20 minutes to another side of the city to try some lunch specials at a Chinese place and see if that’s any better.
This situation IS getting ridiculous enough that someone can come along with an actual good deal and make money on volume again. But in this decade that’s a radical, risky business plan.
Sushi is expensive in general. I can’t really comment on soup and chicken salad since I’m not much of a fan of either. I usually go for Chinese or Thai for the best deals. When fast food is charging $6 just for a burger, I’d rather pay $10 for Pad Thai. Yes it’s more expensive, but the value is much better.
I think we need to seperate the ability for a corporation to make decisions of its own free will from the notion of fairness and equity for a society which allowed a franchise like Wendy’s to be created. They’re giving many of their supporters the middle finger after thinking they found a winning lottery ticket.
I can understand being pissed off about it as someone who isn’t rich, but I also understand it’s a system I have no control over other than what I choose to buy myself. I won’t support Wendys if they want to choose profits over people. It’s sad to see more of the world turn into a heartless corporate hellhole.
I personally hope they got their numbers wrong and they fail.
deleted by creator
Training is a great, important word here. There’s a huge lag between setting prices and having them affect your business. Most people will try a new place once, regardless of the price. The first time they go they’ll judge the price by the style of restaurant. It’s not until the second time they’ll factor the price into their decision. Companies only care about “training” when it goes the other way, when it’s a good reputation they can liquidate through enshittification.
When they’re on the downside of training all they think about is “MONEY NOW” while they’re effectively scamming their customers and slowly destroying their customer base.
There’s a hot chicken place near me that’s having exactly this problem. The downtown, novel location in the middle of the walking market (a tourist attraction) was a bit expensive, but good. They expanded out to the suburbs, kept the downtown prices, and no longer give sweet tea for free. And somehow they’re surprised that less than a year after opening they’re lucky to have three customers at once. I’ll give you a hint. You’re charging $10 for a chicken breast on a slice of wonder bread. Chicken used to be popular because it was cheap.
https://hotchickentakeover.com/menu/
Compare to this 2005 Popeye’s commercial. 11 pieces of chicken for $10. Not a single breast. Look me in the eye and tell me prices have actually risen 11x in 20 years.
Alternate timeline: Surge priced fast-food becomes a status symbol. People buy used Wendy’s packaging in order to hide their homemade food and not be made fun of.
deleted by creator
And it’s driving our world
economyinto the ground.deleted by creator
I agree it sucks. But I can understand the rationale. At peak times, if people try to go to Wendy’s, and it’s too busy, they go somewhere else. At this point the demand is higher than supply. Clearly increasing cost will create more profit.
Long term they are probably hoping that people decide to not all come in a peak times, and the peak is more spread out. This way lines are never long enough for people to just say fuck this and then leave. Less lost sales = more profit.
In reality I can see people just not going, so I agree with you that long term they see less sales. But honestly who really knows, people can be pretty irrational.