Tuesday, April 01, 2008

Value Menus: Bad Health and Bad Business

I've been thinking about food advertising a lot lately. Bad thoughts.

On Saturday I moderated a panel on Food and Diet Advertising at the annual meeting of the American Academy of Advertising in San Mateo, Calif. Five excellent papers were presented, and the picture is grim.

Recently former Indiana colleagues of mine from Indiana University performed a large-scale content analysis on food advertising.

In May, my lab group and other Texas Tech colleagues will present research on rural Hispanics and diabetes at the annual meeting of the International Communication Association in Montreal, Canada.

During that research project, we learned that fast food value menu items were a substantial cause of problem. Unfortunately for public health, value menus solve two problems: time and money.

You can eat quickly and inexpensively on the dollar menu. Unfortunately, it's bad for your health.

All of which is a long introduction to explain the joy I had today when I opened the Advertising Age that came in the mail to see the headline "Value Menus Cost Operators Dearly: Burger King franchisee in New York shutters stores, blames dollar offerings."

Thousands of people will die prematurely -- and society will pay countless dollars in public health bills -- because of these value menus. I am glad to see that value menus are becoming bad business for the franchisees.

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Anonymous Billy Fischer said...

Sam -

I've not read the article in AdAge, but I'm surprised to hear that value meals are hurting the fast food industry. Can you imagine McDonald's or Burger King without the burger, fry and drink combo?

So, what is the solution? More healthy value meal options? If so, how do these chains do that without completely changing everything there is about their brand.

In my opinion, that's a tough one.

8:58 AM  
Blogger Samuel D. Bradley said...

Billy, the problem seems to be specifically focused around the dollar menu items.

Since most fast food places have $1 items, you lose a competitive advantage if you get rid of your $1 items.

There is obviously very little (or no) profit in a $1 double cheeseburger at McDonald's.

But gasoline and beef prices are rising, so expenses are rising. If you cannot raise the $1 items, you raise the price of regular items AND value meals.

However, when you raise these prices, people flip to the $1 items. So they just stop buying value meals and buy no-profit items.

As long as you are anchored to the $1 items, it seems impossible to raise the other prices without losing volume on the higher profit items.

A catch 22.

4:28 PM  

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