In the cartoon “SpongeBob SquarePants,” Mr. Krabs, the purveyor of Krabby Patty hamburgers, is known for his frequent and ruthless price-gouging. He can get away with it since he has no competition, save for the unappetizing Chum Bucket.
McDonald’s, a fast-food chain that serves real-world hamburgers, can only dream of Mr. Krabs’s pricing power. It has been forced into a fast-food price war.
Since June 25th, Americans hungry for a deal have been able to get a sandwich, fries, chicken nuggets, and a soft drink under the golden arches for just $5. Burger King” data-wpil-keyword-link=”linked”>Burger King, a rival fast-food chain, is matching the offer with a $5 meal deal of its own.
Wendy’s is also joining in by temporarily adding an ice cream to its long-standing Biggie Bag combo. Meanwhile, Starbucks, determined to protect its reputation for high mark-ups, is pricing a sandwich and a coffee at $6.
McDonald’s calls this the “summer of value”; economists call it deflation. However labeled, the development is heartening for both consumers and Federal Reserve officials, who hope to reduce interest rates before the year is out.