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Food & Beverage: The Aramark Era begins

Popeyes, Five Guys, Franco Manca, Wendys, etc... All expensive enough on the high street that there is enough margin in there not to hike the price too much and for Merlin still to get their 30 pieces of silver. McD's and KFC are more price sensitive.
 
jon81uk said:
How do you know their margin is higher?
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Franchises are a complex beast, and typically kick-back to the company (management, marketing costs) are quite similar across many. Five Guys (@ £11/burger) is guaranteed to have a higher gross margin than McD's (at £3/burger). McD's and all operate more on lower gross profit per customer but higher number of customers, but the number of potential customers in a theme park cannot be influenced by them - and their operating hours are severely limited.

I'm quite good friends with a franchisee, and they all know exactly what business models everyone operates. A family of 4 might spent £50 in Five Guys - try doing that in McD's or KFC!
 
Smiley said:
Franchises are a complex beast, and typically kick-back to the company (management, marketing costs) are quite similar across many. Five Guys (@ £11/burger) is guaranteed to have a higher gross margin than McD's (at £3/burger). McD's and all operate more on lower gross profit per customer but higher number of customers, but the number of potential customers in a theme park cannot be influenced by them - and their operating hours are severely limited.

I'm quite good friends with a franchisee, and they all know exactly what business models everyone operates. A family of 4 might spent £50 in Five Guys - try doing that in McD's or KFC!
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McDonalds is £5 a burger (Big Mac) now but also uses frozen beef patties and frozen pre-cut fries. Five Guys use fresh mince and cut the fries in-store, so the costs to produce the food is significantly different. I don't think it is guaranteed that the margins will be massivly different. Yes Five Guys will make more money per meal sold, but they sell fewer (McDonalds has always been designed to operate best at scale, selling food quickly) and Five Guys will likely have higher rents and own fewer of the stores. Overall profit per store isn't linked to the margin per item really.

McDonalds worked well in the park because they had the systems in place to sell at high volume so could offer a reasonable price.
 
McDonald’s also offer street prices in motorway service stations unlike BK which for me is a big thumbs up. I think they did the same when they had outlets in Alton.
 
GaryH said:
McDonald’s also offer street prices in motorway service stations unlike BK which for me is a big thumbs up. I think they did the same when they had outlets in Alton.
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Although McDonalds has a lot more price variability than they used to. I can recall they used to be almost the same price nationally, but it is now more regional than it used to be. But yes their prices don't vary as wildly as BK do.
 
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