Here's Why Fast Food Prices Are More Expensive In Other Locations
If you're a big traveler, you've probably noticed that the same fast food items such as Big Macs and Chick-fil-A chicken sandwiches often sell for different prices in different locations across the United States. A similar phenomenon occurs in big cities. For example, a Taco Bell crunchy taco might cost less in one part of NYC than another. But why the discrepancy? Riley Walz, a business student at the City University of New York, set out to find out what the difference in fast food prices is in various parts of the United States and to determine why the numbers vary so much.
To run the experiment, Walz created a fast food index that compared prices on popular fast food items such as the Big Mac and Chipotle's chicken burrito at restaurants throughout the country. Not surprisingly, Walz found that the cost for the same item varied – sometimes significantly – at different locations. Business Insider, which highlighted Walz's study and shared his findings, suggested three reasons for the distinct prices: one, some franchises, like some Taco Bell locations, set their own prices which naturally vary; two, those prices are influenced by labor costs and minimum wage pertaining to the location of the restaurant; and three, real estate prices are also different depending on location. Franchisees in some parts of the country have to pay much more in rent than those in other parts.
Big Macs might have a big cost
Restaurant Business conducted a similar study to find out the variability in fast food prices depending on a restaurant's location within the U.S., this time focusing solely on McDonald's Big Macs and cheeseburgers. Just as Business Insider reported, minimum wage played a big role in cost. The study found that when comparing areas where the minimum wage was $7.25 an hour to ones where it was $14 an hour, Big Macs cost 26% less in the places with lower pay, and cheeseburgers cost 30% less.
On a larger scale, prices for fast food items also vary around the world. Per Saving Spot, CashNetUSA compared prices of Big Macs and Happy Meals not only for the U.S. but also for every country around the world. Like the American findings, economics may have played a role in the results. The most expensive McDonald's were found in two of the wealthiest nations on Earth in terms of GDP: Switzerland and Liechtenstein. The least expensive locations were in Pakistan and Egypt.
Curious about what the actual American statistics are and where you can find the cheapest fast food across the U.S.? According to Walz, the Big Mac was the least expensive at a Eufaula, Oklahoma location, selling for $3.39, and the most expensive in Lee, Massachusetts, where it set customers back $7.89.