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If you want the cheapest fast food in the U.S., then you have to drive to Mississippi.
Cheap Fast Food
In a recent “study,” BravoDeal selected one menu item at McDonald’s, Domino’s, Chick-fil-A, and Taco Bell. Then, focusing on the Big Mac, , a medium cheese pizza, a chicken sandwich and a combo meal, they concluded that Mississippi’s Big Mac, at $3.91, was 10% cheaper than the national average. Similarly, you also could drive to Mississippi to get the cheapest chicken sandwich.
These are the places to go for a cheap meal:
By contrast, in this 2024 map, the darker states charge the most for a Big Mac. As you might expect, my own state, New Jersey was near the top of the price scale with Hawaii (#1), New York, California, and Maryland:
At this point, for fast foodies, the news gets even better. In several of the cheaper states, it is easier to find a place to eat.
When the people at Pricelisto compared the number of restaurants to the number of people, they wound up in West Virginia with 49.04 places for fast foodies per 100,000 residents. Next were Kentucky, Kansas, Mississippi, and Ohio. By contrast, in Alaska, California, Idaho, New York, and Vermont, finding fast food would have been tougher.
Pricier Fast Food
The problem, though, is higher fast food prices. Sherwood tells us that during last March, fast food prices had climbed by one third. Instead of a place for an inexpensive meal, fast food became a family luxury.
As a result, fast food’s pricier cousins saw an opportunity. Chipotle and Chii’s realized, they could compete on price.
Our Bottom Line: Monopolistic Competition
In monopolistically competitive markets, companies need to tell us why they are special. Yes, McDonald’s wants to differentiate itself from Burger King. But here, as prices went up, the market inflated beyond fast food. Rather than saying they are cheaper than their “brethren,” they are comparing themselves to the rest of the restaurant universe.
In a monopolistically competitive market, it all makes sense.
Monopolistic competition is composed of two halves. The monopoly part indicates the company is producing something unique that you associate solely with it. But in the competition half, there are lots of other firms that could be identical or very similar. A beauty salon is the perfect example. You can get a haircut at many hundreds of shops. But the one person that does your hair is what makes the place unique.
Below, I’ve drawn a market scale showing the most (left) to the least (right) competition. On the left side we have the price takers, small firms, and easy market entry. On the right, we find the opposite:
I suspect that fast food competitors are struggling with the conflict between an old and new identity. For their monopolistically competitive market, they need to decide.
My sources and more: Thanks to Sherwood, my newest destination for interesting stories for inspiring today’s post on fast food competition fights and Food & Wine for its graphic image.
