CKR continues to stress that it will not respond to today’s environment by offering “low priced margin-impairing products,” but rather it is focus on selling “innovative, premium priced products.” At the same time, the company understands consumers are under financial pressure and that there is a critical balancing act between discounting too much (at the expense of margins) and increasing prices too much (at the expense of traffic). Management made some telling comments about just how bad QSR’s promotional landscape has gotten:
“They can’t keep this up before franchisees start filing lawsuits.”
“People this quarter were literally giving food away.”
“they can’t maintain these prices much longer
CKR also explained that adding a slice of cheese to a burger currently adds about $0.30 of costs, which puts MCD’s Dollar Menu double cheeseburger and Wendy’s $0.99 Double Stack cheeseburger into perspective from a margin standpoint.
But the reality of the situation is different that then the rhetoric. See below!