The Dollar Menu at your favorite fast food place may seem like a great idea, but across America, those super cheap menus are disappearing. Just why is that? It turns out it's actually a complicated combination of a lot of reasons, and some are very surprising. In 2013, McDonald's announced that it was going to completely get rid of its Dollar Menu. At the heart of the problem was money. The land of the golden arches first released its Dollar Menu in 2003. In the ensuing years, continued competition between fast food chains kept prices low as everyone scrambled for their piece of the pie, but a decade after launch, those Dollar Menu prices became problematic. Over the years, the cost of ingredients has been steadily on the rise, but the Dollar Menu stayed the same low, low price and that's a huge problem.
Just look at the cost of buying beef. According to the Official Data Foundation, the price of uncooked beef was 69 percent higher in 2013 than it was in 2002. Unsurprisingly, the profit margin on cheaply priced menu items just isn't wide enough to weather that sort of increase.
In 2009, the ketchup hit the fan when Burger King franchisees banded together to protest corporate's long-term 99-cent double cheeseburger promotion. The reason for the outrage was pretty simple: each one of those double cheeseburgers cost about $1.10 to make. Franchisees originally rejected corporate's push to sell the super-cheap burgers, and the conflict eventually led to a lawsuit on behalf of the franchisees. Burger King said it had a right to force franchisees to participate in promotions, while franchisees said it wasn't right to force them to sell a product at a loss.
Some stores had already closed in the past because low-priced items dug too far into their profits. Franchisees were fighting to keep that from happening again. In 2011, the two sides settled. In exchange for dropping the lawsuit, franchisees were given more control over pricing, promotions, and ultimately, the Value Menu. No one can possibly expect any restaurant to sell their product at a loss, especially when they're paying royalties to their parent company on every burger sold.
Watch the video to learn the real reason dollar menus are disappearing across the country!
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Beef prices and inflation | 0:16
The Burger King lawsuit | 1:00
Millennials aren't buying it | 1:54
Crowded menus | 2:44
Tiered replacements | 3:26
Lack of new customers | 4:09
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