At the beginning of 2015 I thought it might be an interesting experiment to collect a year’s worth of those fast food coupons that appear regularly in the mail. In my neighborhood, the two most frequent fast food restaurants to send out coupons are Carl’s Jr. and Arby’s. These two, by far, outshine any other fast food chain. Between those throwaway newspaper-style circulars and the more glossy ad inserts, I get 2-3 from each chain every month. It’s crazy. So I waded through a stack from each chain and followed a few popular fast food menu item prices as they changed over the course of the year. Here is the first report on the experiment following the Carl’s Jr. Western Bacon Cheeseburger (the WBC).
Things were pretty consistent during the first half of the year, with the WBC coupon remaining Buy Two Get $3 Off through the beginning of July. Note, this is already a big trend in recent times where you have to buy two items to get a discount. You’ll see that there are still deals to be had on single sandwiches, but it is obvious that the fast food marketers are getting creative with various offers in an attempt to squeeze as much margin out of each menu item while still giving a perception of value. For the purpose of this exercise and for clarity, let’s call this $1.50 off each WBC.
Uh oh, just a month later, the deal shrunk to $2 off two burgers, or $1 off each Western Bacon Cheeseburger.
For the coupon expiring in September, we were back up to the $3 off two WBC standard. Whew.
OOH, even better. Now we only have to buy one Western Bacon Cheeseburger and we save $2.
Now things are getting interesting. Both this coupon and the one before it expire in October. This second one, expiring on 10/31, marks a transition from dollar-off coupons to buy-one-get-one (BOGO) style coupons. But wait, read more closely. It’s a free WBC with the purchase of a COMBO. Figuring out the per-burger price requires some minor mathematical gymnastics. but we can take a short-cut by saying if the full burger-only price is 3.99 then that is the discount. Sure a $4 discount sounds great, but you are forced to buy fries and a drink that maybe you didn’t want and that the previous coupons didn’t require.
So, if you didn’t like being forced to buy the fries and drink on the last coupon, we see the final coupon of 2015 (expiring January 2 of next year) gives you those for free. But you have to buy the sandwich at full price. This turns the fries and drink into “loss leaders” to drive sandwich sales. However, I’d argue Carl’s Jr. still comes out ahead since the margin on the fries is pretty substantial and the margin on the drink is even greater. Effectively, they show full revenue for the sandwich, their prime motivation, and eat some costs on the peripherals. The perception here is you are saving the retail price of the fries and drink, which sounds like a good deal at $2.50 to $3. But think about it. If you only wanted the sandwich you aren’t saving a penny.
Conclusion: If you walked into a Carl’s Jr. at the beginning of the year wanting to buy a single Western Bacon Cheeseburger at a discount, you couldn’t. Then you could for a short time. But by the end of the year, you had to take on stuff you didn’t want in order to get a discount and finally, take stuff you didn’t want for free while saving zero on the item you came in for. Amazing.