Fast food is often considered one of the cheapest ways to have a meal, but some deals that look like bargains could do more to boost restaurants’ profits than protect them. consumer wallets.
At the center of the strategy is a pricing tactic known as the “decoy effect,” a psychological phenomenon in which a less attractive third option subtly nudges customers toward a more expensive choice, according to the paper. E-commerce research and applications.
Fast food chains frequently use this tactic to steer customers toward more expensive items, Chowhound reported.
“This is intended to make the ‘right’ option obvious,” Skydeo CEO Mike Ford told FOX Business. “The decoy effect proves that pricing is less about math and more about psychology. Brands that understand this win.”
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A cook assembles a cheeseburger. (iStock/iStock)
A common example of the decoy effect in fast food appears in the small, medium, and large menu options, where the price of medium is slightly lower than the price of large.
A medium order of fries can cost $4.70, while the large costs just $5, making the larger size seem like the obvious choice, according to Chowhound.
Ford noted that the strategy extends well beyond fast food.
“It happens with wine lists in restaurants too,” Ford said. “Consumers are presented with bottles at premium prices, so the second most expensive bottle seems to be the smart choice, even though it is still three to five times the usual price.”
A few marketing experts It should be noted, however, that this strategy could harm long-term loyalty.
Two men order at a fast food restaurant. (iStock/iStock)
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“The educated shopper who frequents these establishments will quickly understand that they are paying more,” Frank Tortorici, vice president of media relations at Marketing Maven, told FOX Business. “The decoy effect is not conducive to serving and/or creating your best consumer in the longer term.”
However, Jeffrey L. Degner, a economist with The American Institute for Economic Research says that price is only one factor determining fast food decisions and that the lure effect is “far from misleading.”
“The term ‘decoy’ implies that the customer is not getting what they really want,” Degner said. “But what some customers want most at the drive-thru is ease of ordering, speed or just a little more caffeine in a large drink, rather than a few extra nickels.”
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A customer picks up a bag of food at a drive-thru. (iStock/iStock)
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Degner also pointed out that restaurants sometimes lose money on individual items — a strategy known as “loss of appeal” — and rely on complementary products like fries and drinks to turn a profit.
“A customer always has the option of purchasing the sandwich themselves, which results in a potential loss for the restaurant,” Degner added. “This is far from a deceptive practice by fast food establishments, and consumers have a multitude of choices and motivations when coming to a drive-thru.”
