Recession/Crisis Meals. Can They Really Make Money Off the Dollar Menu?
(Source Yahoo Finance) McDonald's "Dollar Menu." Subway's "$5 Footlong." Quiznos's "Million Sub Giveaway." As the U.S. tries to climb out of the recession, these bargain fast-food meals have become familiar subjects of TV ads and radio jingles -- and for many consumers, they are some of the best food values around.
But few of the hungry diners who bite into those discounted subs and burgers realize that their cut-rate meals can be a flashpoint between big fast-food companies and the franchise owners who operate local stores.
How much money are local stores making -- or losing? To find out, we surveyed franchisees about some popular current and recent promotions. On top of paying royalties (of about 11% to 12% of sales) to the franchisor, franchisees often bear the brunt of a promotion's cost. We also asked franchisees about their wholesale costs for food, as well as labor, rent and utilities, among other things. Prices and menu for a particular promotion also vary depending on location.
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