How Fast-Food Chains Use Menu Strategies to Increase Your Order Size
‘The Big Money Show’ panel discusses a decrease in fast-food sales, and how it is being impacted by inflation, conscious consumerism, weight-loss drugs, and more.
Fast food has long been considered one of the most affordable meal options available. However, some deals that appear to be bargains may actually be designed to enhance restaurant profits rather than genuinely benefiting consumers’ wallets.
Central to this strategy is a pricing tactic known as the “decoy effect.” This psychological phenomenon occurs when a less attractive third option subtly influences customers toward a more expensive choice, as noted in the journal Electronic Commerce Research and Applications.
Fast-food chains frequently employ this tactic to guide customers toward higher-priced items. According to Chowhound, this strategy is designed to make the “right” option seem obvious. Mike Ford, CEO of Skydeo, explained to FOX Business, “The decoy effect proves that pricing is less about math and more about psychology. Brands that understand that win.”
CHINESE-OWNED PORK PRODUCER GOBBLES UP ICONIC AMERICAN HOT DOG MAKER
A cook is pictured assembling a cheeseburger. (iStock / iStock)
A classic example of the decoy effect in fast food can be seen in the small, medium, and large menu options. For instance, a medium order of fries might cost $4.70, while the large is just $5, making the larger size appear to be the obvious choice, as reported by Chowhound.
Ford emphasized that this strategy extends beyond fast food. “This happens with wine lists at restaurants too,” he noted. “Consumers are presented with high-priced bottles so that the second most expensive bottle seems like the smart choice, even though it’s still three to five times the regular price.”
However, some marketing experts caution that this strategy could undermine long-term customer loyalty.
Two men are pictured ordering at a fast food restaurant. (iStock / iStock)
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Frank Tortorici, vice president of media relations at Marketing Maven, expressed concern, stating, “The educated buyer who frequents these establishments will be quick to catch on to the fact that they are paying more. The decoy effect is not conducive to serving and/or creating your best and longest-term consumer.”
On the other hand, Jeffrey L. Degner, an economist with the American Institute for Economic Research, argues that price is just one of many factors influencing fast food decisions. He believes the decoy effect is “far from deceptive.” Degner stated, “The term ‘decoy’ implies that the customer isn’t getting what they really want. But, what some customers want the most at the drive-through is ease of ordering, speed, or just a little more caffeine from a large drink, rather than a few extra nickels.”
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A person is pictured picking up a bag of food from a drive-through. (iStock / iStock)
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Degner also highlighted that restaurants sometimes employ a “loss leader” strategy, where they sell individual items at a loss, relying on add-ons like fries and drinks to generate profit. “A customer always has the option to buy the sandwich by itself, resulting in a potential loss for the restaurant,” he explained. “This is far from a deceptive practice on the part of fast food outfits, and consumers have a multitude of choices and motives when pulling up to a drive-thru.”
‘The Big Money Show’ panel discusses a decrease in fast-food sales, and how it is being impacted by inflation, conscious consumerism, weight-loss drugs, and more.
Fast food has long been considered one of the most affordable meal options available. However, some deals that appear to be bargains may actually be designed to enhance restaurant profits rather than genuinely benefiting consumers’ wallets.
Central to this strategy is a pricing tactic known as the “decoy effect.” This psychological phenomenon occurs when a less attractive third option subtly influences customers toward a more expensive choice, as noted in the journal Electronic Commerce Research and Applications.
Fast-food chains frequently employ this tactic to guide customers toward higher-priced items. According to Chowhound, this strategy is designed to make the “right” option seem obvious. Mike Ford, CEO of Skydeo, explained to FOX Business, “The decoy effect proves that pricing is less about math and more about psychology. Brands that understand that win.”
CHINESE-OWNED PORK PRODUCER GOBBLES UP ICONIC AMERICAN HOT DOG MAKER
A cook is pictured assembling a cheeseburger. (iStock / iStock)
A classic example of the decoy effect in fast food can be seen in the small, medium, and large menu options. For instance, a medium order of fries might cost $4.70, while the large is just $5, making the larger size appear to be the obvious choice, as reported by Chowhound.
Ford emphasized that this strategy extends beyond fast food. “This happens with wine lists at restaurants too,” he noted. “Consumers are presented with high-priced bottles so that the second most expensive bottle seems like the smart choice, even though it’s still three to five times the regular price.”
However, some marketing experts caution that this strategy could undermine long-term customer loyalty.
Two men are pictured ordering at a fast food restaurant. (iStock / iStock)
MCDONALD’S PLANS MASSIVE OVERHAUL WITH MAJOR CHANGES TO RESTAURANTS AND MENUS
Frank Tortorici, vice president of media relations at Marketing Maven, expressed concern, stating, “The educated buyer who frequents these establishments will be quick to catch on to the fact that they are paying more. The decoy effect is not conducive to serving and/or creating your best and longest-term consumer.”
On the other hand, Jeffrey L. Degner, an economist with the American Institute for Economic Research, argues that price is just one of many factors influencing fast food decisions. He believes the decoy effect is “far from deceptive.” Degner stated, “The term ‘decoy’ implies that the customer isn’t getting what they really want. But, what some customers want the most at the drive-through is ease of ordering, speed, or just a little more caffeine from a large drink, rather than a few extra nickels.”
IN-N-OUT TO ENTER NEW MARKET WITH MULTIPLE RESTAURANTS BY YEAR’S END: REPORT
A person is pictured picking up a bag of food from a drive-through. (iStock / iStock)
GET FOX BUSINESS ON THE GO BY CLICKING HERE
Degner also highlighted that restaurants sometimes employ a “loss leader” strategy, where they sell individual items at a loss, relying on add-ons like fries and drinks to generate profit. “A customer always has the option to buy the sandwich by itself, resulting in a potential loss for the restaurant,” he explained. “This is far from a deceptive practice on the part of fast food outfits, and consumers have a multitude of choices and motives when pulling up to a drive-thru.”
