alt Hacker NewsPeople rightly complain about the prices when it comes to chains like McDonald’s. They built their brand on fast, cheap food. But right now, the average cost of a Big Mac in the US $5.79, which is quite high given the raw ingredient cost of the sandwich components, around a 107% markup [1]. And that’s for a burger reconstituted from freeze-dried ingredients shipped in cardboard boxes. And the dining room experience is truly atrocious. It just doesn’t add up.
A burger made of fresh, never frozen ingredients from In N Out or Five Guys only carries a 50-80% markup [1], and those stores are properly staffed and consequently offer a much more pleasant dining room experience.
I suppose my point is that it is possible to deliver a good customer experience and still maintain a healthy operating margin. What McDonald’s is doing to make the whole experience worse is not a necessity to keep the business alive, it is a choice to maximize profits at the expense of the brand’s long-term reputation.
If Five Guys' ingredients cost more in absolute terms, they can afford a smaller markup percentage-wise so that's not necessarily a good comparison. I think despite their larger mark up McDonald's is still significantly cheaper.