Why McDonald’s menu items have different prices, even in the same city

Siva Canjeevaram has lived in Canada for 17 years, but only recently noticed that his son’s favorite meal is not the same price at every McDonald’s.

After a busy week working as a landscape gardener in Calgary, Canjeevaram recently took his family out for dinner twice, at two different McDonald’s locations. The first night, he paid $13.59 for a 20-piece Chicken McNuggets. The next night he paid $11.79.

“I was so surprised,” said Canjeevaram. “Why isn’t the price of McNuggets the same in different parts of the city?”

To determine whether this was an anomaly or a trend, Cost of living used the McDonald’s mobile app to compare the price of 20 Chicken McNuggets at any McDonald’s restaurant in Calgary. CBC queued the order in the app, but switched locations before finalizing to see prices from different locations (without buying hundreds of nuggets in the process).

This data was then plugged into a map to illustrate how much the price of McNuggets can vary within one city. In Calgary, they ranged from $11.69 to $16.39 — and in some cases, McDonald’s restaurants that were only a few miles apart had significant price differences.

You can also see McDonald’s menu prices change from location to location in cities across Canada using the McDonald’s mobile app.

Fast food index

It’s a similar story south of the border, according to Riley Walz.

The 20-year-old software engineer from San Francisco created the Fast food index, an interactive online map showing the price of every Big Mac in America. By scraping data from menus on McDonald’s mobile app, Walz discovered that there were 109 different prices for the popular burger.

The most expensive Big Mac in the US is located in a town called Lee in Massachusetts and costs $7.89 [US]Waltz said. “But the weird thing is that directly across from that parking lot on the other side of the highway, less than a few hundred yards away, is another McDonald’s that sells Big Macs for $1.50 cheaper.”

Walz assumed that the most expensive Big Macs would be in neighborhoods where the median income was higher. But there “wasn’t really a correlation,” he said.

“Certain neighborhoods in Manhattan are probably the wealthiest neighborhoods in New York City. But those weren’t necessarily the most expensive stores, because people who live in the area may not be the people who always eat in those restaurants.”

In Calgary, the most expensive 20-piece Chicken McNuggets were found downtown, in newer urban developments — and in Walmart locations.

Most McDonald’s are franchises

When American salesman Ray Kroc bought McDonald’s in 1961, he came up with the slogan: “Entrepreneurship for yourself, but not aloneAs of 2023, the fast food giant has more than 38,000 locations, making it the largest franchise in the world.

McDonald’s did not respond to multiple requests for an interview or information, but about 85 percent of the 1,400 restaurants across Canada are independently owned and operated. According to the company’s website, franchises are “have the ability to set their own prices.”

In an email, Kenny Chan of the Canadian Franchise Association said, “In general, franchisors don’t set prices at franchisee locations.”

Franchisees are licensed to use the trademarks, intellectual property, and operating systems of franchisors, such as McDonald’s. But as independent entrepreneurs, Chan said, franchisees are “in control of making decisions about how they run their own businesses.”

Eliminate the competition

When pricing their menu items, Chan said franchise owners look at many factors that can affect their profitability, such as rent, supplies and labor.

They also pay attention to menu prices at comparable fast food chains, according to the owner of Calgary’s first Wayback Burgers franchise. Before opening his restaurant in August 2022 and setting his menu prices, Maulik Shukla researched what his local competitors – Five Guys and Fatburger – charged for their burgers and fries.

“I’ve lowered my prices a bit because I’m new to the market,” said Shukla.

However, there are situations where franchises need not foreclose competition. Like when they’re the “only game in town,” restaurant consultant David Hopkins said.

“When you’re on a highway and you’re at the gas station… supply and demand are completely in your favor,” says Hopkins, president of The Fifteen Group in Toronto.

When it comes to menu pricing, Hopkins says it’s about knowing your customers and what they’re willing to pay.

He said fast food chains like McDonald’s use data analytics and data mining to help franchisees figure out “what the market will tolerate.”

“Not a franchise per se, but the first time I had a Starbucks coffee in Niagara Falls I was absolutely shocked by the price. It was about 40 percent more for the same coffee I was used to paying in Toronto. But that’s just the market, tourist market, and they know they can ask for more. They do.”

With inflation still running high, Siva Canjeevaram said he has become more sensitive to the amount of money he spends on certain things, such as eating out.

And now that Canjeevaram knows that 20 McNuggets will cost him nearly five dollars more at one McDonald’s in Calgary than at another, he avoids the more expensive locations.

“Every dollar seems to matter now,” he said.