McDonald’s is known for having an extensive menu with delicious, reasonably priced Food items. But have you ever really wondered why McDonald’s is so cheap? Read this article to know all the reasons behind it! 

McDonald’s is as cheap as it is for several reasons, like the fact that they buy ingredients in bulk, have low labor costs, have a high franchise fee, and also the fact that they train their staff to upsell food, which eventually brings them a significant profit. 

A lot of fast-food restaurants offer food for a reasonably low price. But, you may have had a few bad experiences here and there, as cheap food does not necessarily mean good quality food. But that is not the case at all with McDonald’s! 

Along with serving food at a low price, McDonald’s is well known for serving delicious food. While taking care of the food quality, how does this company still sell food for a low price? With some more information, we’ll find that out in this article! 

Reasons Why McDonald’s Is So Cheap

Sadly, a significant misconception about cheap food is that the quality of ingredients is completely overlooked. But the number of checks McDonald’s does with their raw ingredients and finished product proves otherwise! 

In this section, you will find out why McDonald’s is so cheap. 

1. They Buy Their Ingredients In Bulk

One of the biggest reasons McDonald’s is as cheap as it is is that they buy ingredients in bulk. All their main ingredients, like beef, chicken, and fish, are bought wholesale to cater to all their outlets. 

McDonald’s buys a lot more than most other fast food chains do, as far as meat is concerned. This, in turn, reduces the price of the ingredients to a very high extent. McDonald’s corporation takes this forward to the customers, which results in lower prices. 

2. Companies Offer Discounts To McDonald’s

Another reason McDonald’s has cheap food is that most companies they have partnered with offer significant discounts. The best example is Coca-Cola, which has had a long-term relationship with McDonald’s. 

To keep their relationship as stable as possible in the long run, companies like Coca-Cola offer McDonald’s corporation a significant discount on their syrup. This is a substantial Profit for McDonald’s, which they also reserve for the customers by serving cheap food. 

3. They Sell Highly Profitable Food and Drinks

Just like Coca-Cola offers McDonald’s a huge discount for its syrup, the same applies to many companies collaborating with McDonald’s. Quite a few options on the McDonald’s menu cost nothing compared to what they are sold for. 

An example is their coffee, which usually sells for anything between $ 1 to $ 3. However, the company gets its profit since they buy the coffee for barely any price. Even after keeping a high-profit margin, the company can sell coffee for a much lower cost than other restaurants, all thanks to their bulk buying. 

4. Massive Scale Of Sales

If you ever visit McDonald’s, you may have noticed that their restaurants are almost always packed with many customers. Well, they serve about 68 million customers daily, which is incredible! 

The fact that their sales volume is so high significantly impacts the food’s price. Since they sell so much in a single day, they can quickly recover profits. Hence, they sell their food cheaply, attracting an even larger volume of customers! 

5. Cheap Labor

McDonald’s needs to be known for paying their employees better, sadly. This is another loophole through which McDonald’s can keep significant profits and sell their food for low prices. 

On average, McDonald’s pays their employees $8 to $11, which is lower than minimum wage. They hire people who need to be more skilled and then give them the necessary training. 

Moreover, lately, they have only needed to hire a few people because of self-checkout kiosks. This, in turn, is translated into the selling price of their food, making it as cheap as it is. 

6. Franchise Owners Have To Pay Steep Prices

One more way McDonald’s makes a huge profit, which helps them retain the low prices of their menu items, is the franchise costs. McDonald’s has most of their outlets which are franchise owned. 

For franchise-owned outlets, the owner has to pay rent, 4% of the gross sales each month, along with a fee of $ 45,000 to own a franchise in the first place. This, in turn, gives them a significant profit which helps them sell their food for cheaper prices. 

7. Ability To Upsell

McDonald’s is one of those fast-food restaurant chains where upselling happens so much more than we could ever imagine! If you have been to McDonald’s, I am sure you may have heard the phrase, “Would you like to add fries with that to make it a meal?”

This upselling tactic has helped them get profits for a long time. The idea is to upsell the cheapest item, making customers impulse buy. This, in turn, receives the company more gain, which translates into them selling food for a more affordable price. 

8. Great Advertising And Promotion

Most advertisements you may have ever seen for a fast-food restaurant chain would have possibly been the ones you saw for McDonald’s! There is a valid reason behind this since McDonald’s spends a lot of money on advertising and promoting their food. 

This way, they ensure the advertisements reach as many potential customers as possible. This, in turn, translates into then getting an even higher volume of customers, which leads to more profit. The sheer volume of customers they would get after any marketing campaign is enough for them to profit despite low prices.

9. Kids Meals

One of the reasons why McDonald’s food is cheap has a lot to do with the kids’ meals, or ‘happy meals’ as they call them. This may seem like a strange correlation, but this is one reason their food is affordable. 

Here, they spend a lot less on making the kid’s meals than what they sell the meal for, which is also not much. So, whenever they sell a kid’s meal, they are bound to profit from it no matter what; hence it works for them even if the dinner is priced very low. 

10. Their Business Model For Franchises

Yes, McDonald’s does take a $45,000 upfront fee from franchises, along with them expecting to pay rent for the property. This may sound a little, but renting from franchise owners has much to do with cheap food items. 

McDonald’s sublets their outlets to franchise owners with a variable rent, although they pay a fixed rent for the same property. This means they get extra profit from franchise owners as the rent increases with time. This way, they get a significant profit and can afford to sell their menu items for a cheaper price. 

11. Happy Meal Toys

Returning to the kid’s meals and how McDonald’s makes a lot of money from there, one more reason for that is the toys. Like their happy meal food, McDonald’s does not have to pay as much to the toy manufacturers. 

Moreover, the toys also tend to attract a whole bunch of customers. This brings them immense sales volumes and profits. So, in turn, they can afford to keep the prices of their food items cheaper than other places. 

Does Cheap McDonald’s Food Mean It Is Unhealthy? 

No, cheap McDonald’s food does not mean it is unhealthy. 

McDonald’s food is not the healthiest, and too much of it can be bad for the human body. But that has nothing to do with the fact that the food is cheaper than in other fast-food restaurant chains. 

McDonald’s food is unhealthy for various reasons, mainly because it is deep-fried and loaded with salt and sugar. Look at McDonald’s menu nutrition for a better idea of their food’s exact nutritional values. 

That being said, their food is cheaper than the rest because they profit from other sources. McDonald’s has never sold cheap food because of using lower quality ingredients or very unhealthy ingredients. So, although McDonald’s food is technically still unhealthy, it does not correlate with the fact that it is also cheap. 

Conclusion

As we have reached the end of this article, I hope you got all the information you needed about why McDonald’s food is as cheap as it is. Some of the points mentioned above may have come as a huge shocker, but these are how the company makes massive profits. 

Because the company can get profits via so many routes, they can keep the food as cheap as possible, which works well for our customers! If you want to learn ways to save some money at McDonald’s, you should look at our articles on McDonald’s deals and hacks to save money at McDonald’s! 

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