Menu Costs

Menu costs are used to explain why prices don't always adjust as quickly as they should. This isn't exactly an example of it, but it'll work for now, as I'm on a blog deadline, and I can't be expected to do any more searching than I've already done! Anyway, Reason reports that the dollar menu at McDonalds is having some trouble because agricultural commodity prices are making it really hard to keep things up there. Some places have raised the price of the dollar menu to $1.19 (19% increase - that's pretty substantial), others are pulling off the cheese. Okay maybe it is a menu cost. IT's on a menu dammit, and they don't want to do the obvious thing and raise it up, but it's interesting that it's not because it's simply too expensive to reprint the menus. Probably, there's something psychological about everything being a dollar. Everything for a dollar nineteen doesn't have quite the same ring.