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Five Dollar Demand

Consumers love deals, especially when making decisions on where to get a quick bite to eat. And after years of trying just about every sales promotion under the sun, fast food marketers think they have found THE "sweet spot" price point for ultra-casual diners, at least for now. And that price is five bucks.

 Image result for fast food 5 dollar deals

From Subway's Five Dollar Foot Long promotion to KFC's $5 fill-ups to the $5 lunch combo at Little Caesar's to Dairy Queen's Five Buck Lunch to Carl's Jr./Hardees's $5 All-Star Meals to McDonald's McPick 2 for $5 to Long John Silver's Reel deal for 5 Bucks to Sonic's $5 Sonic Boom Box to Taco Bell's Five Buck Boxes, it sort of looks like these brands are all using the same marketing agency. But really the $5 thing has become an industry standard. The perception among these marketers is that a five dollar price point will weather all sorts of market conditions such as supply chain commodity price increases, economic downturns, and the political/regulatory challenges that tariffs present. And so five bucks it is.

 Image result for fast food 5 dollar deals

This sense of getting a bargain transcends age and income, but seeking value as a primary driver of behavior is especially prevalent among today's younger consumers who have been slower to achieve financial independence than previous generations and therefore seek value as a necessity. Besides they spend lots of money on cocktails, concerts and other "experiences" and so need to save on necessities like food. And" five dollars" is a common currency denomination, which resonates with just about everyone who still uses cash., which is just about everyone. Obviously these price points can only be achieved by chains that do tremendous volume (fixed costs can be spread over more units), and even these marketers struggle to turn a profit with such narrow margins. But this kind of vigorous competition, while challenging for marketers, is always great for consumers.


Discussion: Is your fast food consumption behavior driven by these sorts of deals or are there other factors you might consider? Is $5 an important price point for you? Why or why not?

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