For instance, we found similar prices at McDonald’s locations in Fargo, N.D., where the hourly minimum is $7.25, and in Moorhead just across the border in Minnesota, where the minimum wage is $11. The higher wages, in turn, drive up prices. Many franchisees we’ve spoken with have said they pay wage rates considerably higher than local minimums-driven largely by heavy competition for labor.ĭespite low unemployment, many restaurants struggle to find workers. Market conditions play a major role regardless of the minimum wage. “It’s driven by market conditions and it’s driven by governmental conditions.” He noted driving around Minneapolis years ago to see signs that Burger King was hiring at $13 an hour-though the minimum was much lower. “Hourly wage is going to do it,” Martinez said. The wide regional and local differences in wage rates can frequently lead franchisees to raise prices. Labor can cost 24% to 30% of a franchisee’s revenues, Lewis said. Yet Lewis noted that high-volume markets can drive up how much a franchisee pays for real estate, which can influence how much franchisees charge for their Big Macs. That can take real estate costs out of the equation to a degree.
The company controls the real estate used by its franchisees and charges them based on a percentage of their sales. Juan Martinez, the principal at the consulting firm Profitality, said the biggest factors behind pricing at the local level are labor and real estate.Ĭities where the minimum wage is highest-including New York City, Seattle and San Francisco-have high real-estate costs that can also influence prices in those markets. The price of food can influence prices, for instance, though in a chain those costs usually are the same as they are everywhere. Plenty of factors go into menu pricing, generally. The chain’s app also makes the research relatively simple. The Big Mac is a consistent and well-known product. Fast-food restaurants in particular have taken advantage of a market in which it has been the only game in town, raising prices more than 6% over the past year, double the inflation rate of full-service restaurants.īut we looked at McDonald’s prices because it is big and ubiquitous-its restaurants are in every state. Install bigmac-index-price-calculator import from ".McDonald’s is hardly the only chain raising prices. ✌️ How to use 🍔 yarn add bigmac-index-price-calculator The library is designed so it doesn't break server-side rendering. Prices come back in USD, adjusted for purchasing power. The library uses it to geolocate your users and calculate a fair price based on your American price.īy default there is no currency conversion. This library makes it easy to use big mac purchasing power parity in your projects. It aims to compare purchasing power across the world using the price of a Big Mac. The Big Mac Index is a purchasing power parity index published by The Economist.
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