- Do you ever find yourself spending more on fast food than you expected to?
- Fast food is getting more expensive, outpacing fine dining and fast-casual restaurants.
- Combos, add-ons, and multiple size options are just a few of the tricks used by fast-food restaurants.
- We spoke with Hans Taparia, clinical associate professor of business and society at NYU, to find out the ways fast-food restaurants get you to spend more money.
- Visit the Business section of Insider for more stories.
Following is a transcript of the video.
Narrator: This is a No. 3 from McDonald’s: a burger, fries, and a drink. It costs $11 in New York City.
Fast food is supposed to be cheap and convenient, but do you ever find yourself spending more on fast food than you expected to?
You’re not alone. According to one study, Americans spend about $1,200 on fast food every year. Places like McDonald’s and Burger King do everything in their power to get you to spend more money, and it turns out fast food isn’t as cheap as you think.
1. The menus.
Fast food is all about the deals. Value meals, combos, coupons – oh my. But the seemingly simple menu actually hides most of the options. Compare a fast-food menu to a fine-dining-restaurant menu. The restaurant menu is simple and not very stimulating, but the fast-food menu is a noisy mess of options and categories, and fast-food restaurants grab your attention with bright reds or oranges along with big appetizing photos of their food. There’s a hierarchy. The pictures are big, but the prices are small. They keep your attention on the items that cost more by showing these really big on the left side where you start reading. You’re not wondering if that burger is worth $6, you’re just looking at those big juicy patties.
Hans Taparia: Food pictures, they light up the brain, you know, particularly when you’re hungry. Large food pictures for a food company are key.
Narrator: That’s Hans Taparia. He’s a health-food entrepreneur and a professor of business and society at NYU.
Hans Taparia: The playbook has been around for a while, I would say since the ’80s, which has been centered on simplicity, cheap, and bold and bright.
2. The pricing format and dollar menu.
Narrator: Fast-food restaurants use other tricks too, like not showing a dollar sign or using a 9.79 or 0.89 pricing format. Pretty much $10, but you still think it’s $9 because you read left to right. But what about the dollar menu, right? Well, dollar and value menus do exist, but they’re often small and far off to one corner where they are harder to see.
Hans Taparia: And if you buy multiple items off the value menu, it won’t necessarily be cheaper than a Happy Meal. So it’s not necessarily less profitable for them, but it accomplishes two things. It keeps the consumer coming, and it’s catering to a consumer that is increasingly poorer in the case of these conventional fast-food outlets.
3. The combo.
Narrator: And even though fast-food menus are big, their confusing layouts make it difficult to find exactly what you’re looking for. It’s easiest to read the menu when you’re close to the counter. But then it’s time to order. The pressure is mounting, and you just pick that big, bright, juicy No. 3, and that No. 3 is where the real secret of the menu lies: the combo. The star of the menu is the combo meal. You can order an entree, a side, and a drink just by saying one easy number. It takes a lot less time to order the No. 6 than a 10-piece nugget, medium fry, and a medium drink, but have you actually done the math to see if that combo is saving you any money? Take McDonald’s. If you buy a No. 3, it costs $10.39, but if you were to buy the Double Quarter Pounder, medium fry, and medium drink, it costs $10.48. You’re only saving 9 cents, and often you’ll end up with things you didn’t even want in portions that are way bigger than what’s healthy.
Hans Taparia: And creating this perception, which is quite real actually, that the per-ounce cost of something bigger is lower, and so I’m just getting better value for my money, forget the fact that I’m buying 32 ounces of soda, which has half a cup of sugar.
Narrator: The convenience of ordering a preselected meal gives fast-food restaurants control over what you order. Combine this with multiple size options and cheap upgrades, and it’s hard to walk away with a small in every category.
When was the last time you went to a place like Taco Bell and just bought one taco? Fast-food restaurants make more money from customers buying multiple items. Items like soda have a much higher profit margin compared to burgers, so fast-food companies do everything they can to get you to buy a drink.
5. What you want, when you want it.
They’ve added things like 24-hour locations and all-day breakfast to make sure you can get whatever you want whenever you want it. If you think you have more control at an ordering kiosk, you’re wrong. According to McDonald’s CEO Steve Easterbrook, customers spend more on average at kiosks because they linger longer. Guess what those kiosks also have. Lots and lots of pictures. And that’s just the tip of the, um, Frosty.
6. Free food.
Fast-food companies are experts at getting customers in the door. They advertise the most outrageous deals on signs, posters, and TV commercials. They can get you in the door for some “buy one, get one free” nuggets, you’ll probably buy a drink too. Oh, look! You can make that a meal and add fries for just a dollar more. Companies also use brand tie-ins like Doritos Locos Tacos and coupons that expire in a week, like the ones you may have seen on the bottom of your receipt, not to mention app reward points or special daily deals found only in the app, just like the old-fashioned punch card. You’ll eat at a restaurant more often if each purchase brings you closer to free food.
Hans Taparia: Any one thing in isolation itself may not have a huge impact. The power of marketing is when you overlay things.
Narrator: But there’s a deeper issue here. Fast food isn’t as cheap as it used to be. According to Bloomberg, the average price of a fast-food burger has increased by 54% in the past decade, outpacing fast-casual and fine-dining restaurants. But fast food is sometimes the only option in low-income food deserts, and your environment has a big impact on your health and weight.
7. The more affordable option?
Healthy fast-casual offerings are often so much more expensive than fast food that they no longer target the same demographic, especially if you’re feeding a family. KFC will give you a lot more food per dollar than an organic-salad chain. Fast-food restaurants are able to lure consumers into spending more money on large unhealthy portions because it’s more affordable than healthier options.
Fast food can be cheap and convenient, but you have to fight off all the psychological tricks that are engineered to get you to spend more money. You shouldn’t be paying a premium for low-quality unhealthy food.
EDITOR’S NOTE: This video was originally published in March 2019.