McDonald's was sued this week because they charge customers for the cheese on a Quarter Pounder, whether they want it or not. Silly as that sounds, it's a big deal for McDonald's because, in fast food, cheese is a big deal.
Take Burger King, for instance. I recently ordered a Whopper and, as usual, the order-taker asked "Do you want cheese with that?" Rather than answering, I asked, "How much does the cheese cost?" The answer (once I was able to get one; see below) was "50 cents."
On the Web, you can buy a 20-lb. pack (480 slices) of Kraft American Cheese for $70.65, which comes out to roughly 15 cents a slice, which means BK is enjoying a markup--roughly the same as profit in this case--of a whopping 240 percent.
And that's not including the huge purchasing discount that BK undoubtedly gets.
Needless to say, if you're interested in making more profit (and who isn't), it's worthwhile to investigate exactly how BK manages to command such a huge markup without alienating its customers. Here's how they do it:
1. Markup something that everyone wants anyway.
Cheese is so ubiquitously added to burgers that fast-food researchers (yes, that's a thing) often don't even list it as an optional topping.
2. Make it something that everyone assumes is inexpensive.
Most people undoubtedly think of the cheese as falling into the same low-cost category as condiments or maybe pickles.
3. Present the upsell as good customer service.
For years, BK used the tag line "Have It Your Way," thereby priming people to perceive the question "Do you want cheese with that?" as helpful. This is certainly more effective than folding the cheese into a single price, as McDonald's has elected to do.
4. Conceal the price from your customers.
On the menu, the added cheese is not presented as an add-on, nor is the Whopper with Cheese shown as a separate choice. The price is not shown on the receipt either, which simply reads "1 WHOPPER CHS $5.59."
As a result, the price of the cheese is only known to the rare customer who 1) remembers the menu price, and 2) can do the math in their head. If the customer orders the Whopper as part of a meal, the price of the cheese becomes even more deeply obscured.
5. Conceal the price from your own workers, too.
The most brilliantly cynical part of the strategy is that BK even conceals the price of the cheese from its own workers. BK's registers use icons not prices, so there's no price associated with the cheese, just a button.
When I asked the order-taker how much the cheese costs, he had no idea. The only way he could figure it out was to ring up both items and do the math. He looked quite surprised when he found out how much that damn slice cost.
Why hide it from your own workers? So they don't blab it to their friends, of course. I'd wager than less than one out of 1,000 BK customers realize that when they ordered Whoppers for a family of four, they paid $2 for 60 cents worth of cheese.
Anyway, as I finish writing this, I realize that this is the perfect opportunity to share this ancient witticism: "If Burger King married Dairy Queen would the ceremony be held at White Castle, and would the wedding photographer ask everyone to say 'cheese'?"