Can They Really Make Money Off The Dollar Menu?

Wall Street Journal:

McDonald’s “Dollar Menu.” Subway’s “$5 Footlong.” Quiznos’s “Million Sub Giveaway.” As the U.S. tries to climb out of the recession, these bargain fast-food meals have become familiar subjects of TV ads and radio jingles — and for many consumers, they are some of the best food values around.

But few of the hungry diners who bite into those discounted subs and burgers realize that their cut-rate meals can be a flashpoint between big fast-food companies and the franchise owners who operate local stores. The promotions are typically decreed by company headquarters, hoping to lure in customers and fend off the competition. These days, however, some franchisees say the costs of offering these deals are too high — and worse, that penny-pinching consumers drawn by promotions are skipping full-price extras that typically help offset the low margins of the discounted items.

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