Why McDonald's menu items are different prices, even in the same city
The price for 20 Chicken McNuggets varies by almost $5 at restaurants just a few kilometres apart
Siva Canjeevaram has lived in Canada for 17 years, but only recently noticed that his son's favourite meal is not the same price at every McDonald's.
After a busy week working as a landscaper in Calgary, Canjeevaram ended up taking his family for dinner twice recently, at two different McDonald's locations. The first night he paid $13.59 for a 20-piece Chicken McNuggets. The next night, he paid $11.79.
"I was so surprised," said Canjeevaram. "Why is the price of McNuggets not the same in different parts of the city?"
To determine if this was an anomaly or a trend, Cost of Living used the McDonald's mobile app to compare the price of 20 Chicken McNuggets at every McDonald's restaurant in Calgary. CBC queued up the order on the app, but changed locations before finalizing it to see different location's prices (without buying hundreds of nuggets in the process).
This data was then plugged into a map to illustrate how much the price of McNuggets can vary within one city. In Calgary, they ranged from $11.69 to $16.39 — and in some cases, McDonald's restaurants located just a few kilometres apart had significant price differences.
You can also see McDonald's menu prices change from location to location within cities across Canada using the McDonald's mobile app.
Fast food index
It's a similar story south of the border, according to Riley Walz.
The 20-year-old San Francisco software engineer created the Fast Food Index, an interactive online map that shows the price of every Big Mac in America. By scraping data from menus on the McDonald's mobile app, Walz discovered that there were 109 different prices for the popular burger.
"The most expensive Big Mac in the U.S. is in a town called Lee in Massachusetts and it costs $7.89 [US]," said Walz. "But the weird thing is that directly across that rest stop on the other side of the highway, less than a few hundred feet away, there's another McDonald's that sells Big Macs for $1.50 cheaper."
Walz assumed that most expensive Big Macs would be in neighbourhoods where the average income was higher. But there "wasn't really a correlation," he said.
"Certain neighbourhoods in Manhattan are probably the richest neighbourhoods in New York City. But those weren't necessarily the most expensive stores because people that live in the area might not be the people that are eating at those restaurants all the time."
In Calgary, the most expensive 20-piece Chicken McNuggets were found downtown, in newer urban developments — and inside Walmart locations.
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Most McDonald's are franchises
When American salesman Ray Kroc bought McDonald's in 1961, he came up with the slogan: "In business for yourself, but not by yourself." As of 2023, the fast-food giant has more than 38,000 locations, making it the biggest franchise in the world.
McDonald's did not respond to multiple requests for an interview or information, but approximately 85 per cent of the 1,400 restaurants across Canada are independently owned and operated. According to the company's website, franchises "have the ability to set their own prices."
In an email, Kenny Chan with the Canadian Franchise Association said "generally, franchisors do not set the pricing at franchisees' locations."
Franchisees are licensed to use the trademarks, intellectual property and operating systems of franchisors, like McDonald's. But as independent entrepreneurs, Chan said franchisees are "in control of making decisions on how to run their own businesses."
Scoping out the competition
When deciding how to price their menu items, Chan said franchise owners look at many factors that could influence their profitability such as the rent, supplies and labour.
They also pay attention to menu prices at similar fast food chains, according to the owner of Calgary's first Wayback Burgers franchise. Before Maulik Shukla opened his restaurant in August 2022 and set his menu prices, he researched what his local competitors — Five Guys and Fatburger — were charging for their burgers and fries.
"I made my prices slightly lower because I'm new to the market," Shukla said.
However, there are situations when franchises don't need to scope out the competition. Like when they're the "only game in town," said restaurant consultant David Hopkins.
"If you're on a highway and you're at the service station … then supply and demand is completely in your favour," said Hopkins, president of The Fifteen Group in Toronto.
When it comes to menu pricing, Hopkins says it's all about knowing your customers and what they're willing to pay.
He said fast food chains like McDonald's use data analysis and data mining to help franchises figure out "what the market will bear."
"Not a franchise per se but the first time I had a Starbucks coffee in Niagara Falls, I was absolutely shocked at the price. It was something like 40 per cent more for the same coffee that I was used to paying in Toronto. But that's just the market, tourist market, and they know they can charge more. So they do."
With inflation still running hot, Siva Canjeevaram said he's become more sensitive to the amount of money he's spending on certain things, like eating out.
And now that Canjeevaram knows that 20 McNuggets will cost him nearly five dollars more at one Calgary McDonald's than another, he's been avoiding the pricier locations.
"Every dollar seems to matter now," he said.
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