MORE ON McD’S: BURGER ECONOMICS

From this story about McDonald’s ditching super-size portions comes a quote:

Jamie Cox, 19, dining at a McDonald’s in downtown Chicago with his girlfriend Tuesday night, had a mixed reaction to the news. He said he orders Supersize fries but usually throws out leftovers.

“It’s a waste,” he said. “Once they get cold, they’re nasty. But we would die without the [Supersize] drink.”

I agree, cold french fries are nothing more than wasted potential. I am a little more skeptical about the young man’s claim about the drink, however, especially in light of this:

At the McDonald’s restaurant Edgard Alend manages in Chicago, customers buy about 100 to 150 “Extra Value” meals each day, with Supersize fries and drink.

Alend doesn’t think the loss would affect his restaurant’s revenue as much as his customers’ wallets.

“It’s one of the strongest ways for customers to get more for their money,” Alend said about the Super Size.

A “Super Size” value meal costs 39 to 59 cents more, usually, depending on which restaurant you go to. For the money, the consumer gets an extra quantity of fries and a larger soda. But is that actually more value for the money?

Interestingly, the answer depends on one inconsistent variable: whether or not the restaurant offers free drink refills. The practice is highly inconsisent. Some McDonald’s in my area do; some do not. Every Burger King and Hardee’s around me does. (So do all the Culver’s, but Culver’s doesn’t offer upsized combo meals.)

If the restaurant offers free drink refills, then the only added soft-drink value the consumer gets from supersizing is that he or she won’t have to get up to fill the cup more often. Otherwise, you can consume as much soda as you want regardless of the size of drink you buy. (If the restaurant doesn’t offer refills, then there obviously is more soft-drink value in a supersized meal.)

Since we’ve established that the whole thing hinges on drink refills, let’s assume that you’re at a restaurant which offers them. The only significant factor remaining in the equation, then, is the price of the french fries. What’s the difference in price between the “supersize” fries and the next size down? Usually about 25 to 30 cents. Thus, if you’re at a restaurant that offers drink refills, supersizing your meal never gets you more value for your money. All supersizing does is it gets you to pay 40 to 60 cents for a marginal quantity of fries which you can normally purchase for 25 to 30 cents.

So, in summation, it pays to supersize if you can’t get a free refill on your drink. Otherwise, supersizing is a ripoff.