Wendy's is the latest fast food chain to expand its 99-cent menu, adding the double-stack cheeseburger, the junior bacon cheeseburger, and the crispy chicken sandwich. It seems that all fast food restaurants are using 99-cent menus to lure in customers, and there's a science behind this simple-sounding ploy.
The key to making a 99-cent menu work is not putting too many items on it. The items offered for 99 cents have to be enticing, and the restaurant has to be prepared to make little to no profit off the special menu. The profit lies in the add-ons that customers will buy. Drinks are particularly profitable for restaurants, and sides like French fries and salads are also fairly profitable.
Put too many items on the 99-cent menu, and customers won't venture away from it and toward the more profitable items. Put too few items on the menu, and you won't draw in enough customers to make the promotion worthwhile.
I think it's safe to say (in my non-scientific, only anecdotal) opinion that fast food restaurants are aiming toward increasing foot traffic in their stores. Eating out is one of the biggest wastes of money ever, so during times of tight budgets, many families are cutting back on trips to restaurants. If fast food joints can increase traffic with deals for bargain hunters, they stand to make a tidy little profit from all the "extras" sold to patrons.
Tracy L. Coenen, CPA, MBA, CFE performs fraud examinations and financial investigations for her company Sequence Inc. Forensic Accounting, and is the author of Essentials of Corporate Fraud.