Mcdonald's At Airports: Why The Price Hike?

Airport food is notoriously expensive, and McDonald's is no exception. A McDonald's meal inside an airport terminal can cost significantly more than the same meal outside the airport. For example, a McDonald's Quarter Pounder with fries might cost $7.19 at an airport compared to $5.69 at a regular restaurant. So, why is airport food so much pricier?

Firstly, airport rent is extremely high. Commercial space rental at airports can be more than double the average cost of similar spaces outside an airport. Airports often charge vendors based on a percentage of their sales, typically between 10% and 20%. This can make it challenging for restaurants to turn a profit, leading them to increase their prices.

Secondly, there are various additional costs associated with operating a restaurant in an airport. Delivery and supply chain costs are higher due to the complex security protocols and limited delivery windows. Staffing costs are also higher, as airport employees must undergo rigorous and expensive background checks, and employers may need to cover their parking fees.

Finally, airports have a captive audience. Travelers often have limited options and may be reluctant to leave the airport for food due to fear of missing a flight. This allows airport restaurants to charge higher prices without losing customers.

High rent and commissions

Renting a commercial space at an airport is significantly more expensive than renting a regular commercial space. At Portland International Airport, for example, the rent is a minimum of $80 per square foot per year, or 10-18% commission on sales, whichever is greater. This is more than double the average cost of commercial space outside of an airport.

The high rent is due to the competitive nature of airport retail spaces. Entrepreneurs are aware that people in airports are a captive audience, and if they are there long enough, they are likely to shop or eat. Delays also provide a good opportunity for stores and restaurants to make sales. The demand is high, and the supply is low, so airports can charge high rent. Some airports charge rent based on square footage, while others take a percentage of sales, which can make it difficult for restaurants to turn a profit.

In addition to rent, vendors at airports often have to pay a percentage of their revenue as a concession fee to the airport authority. These concession fees can be substantial and are usually passed on to the consumer in the form of higher prices. The concession fees help cover the airport's operating costs, infrastructure maintenance, and improvements.

Delivery and supplier costs

The logistics and supply chain challenges of operating within an airport environment contribute to the overall cost of food. Delivering fresh ingredients, perishable items, and supplies to airport restaurants can be more complex and costly compared to traditional dining establishments. Vendors need to navigate security protocols, limited delivery windows, and specialized handling procedures, all of which can result in higher transportation and procurement expenses. This, in turn, leads suppliers to charge vendors a higher price to transport their goods to airport restaurants.

Airports are usually further away from built-up areas, which means delivery charges tend to reflect the distance that suppliers have to travel. Due to high security at airports, suppliers also have to deal with parking issues and pass through security checks, which can be time-consuming and cumbersome. Even their crates and boxes will likely be subjected to some form of security check to ensure they are not smuggling any prohibited items.

Because of these challenges, suppliers charge a premium to deliver goods to airport restaurants, which increases the operating costs for these businesses. These higher costs are then passed on to consumers in the form of higher menu prices.

In addition, airports are often located far from city centres, which can result in higher delivery charges due to the greater distance travelled by suppliers. The inconvenience and higher costs associated with delivering goods to airport restaurants contribute to the overall increase in food prices at these locations.

Hiring costs and staff expenses

Staff retention is a challenge for airport restaurants, which can result in higher hiring costs and staff expenses. Employees at airports often work irregular hours, including early mornings and late nights, which can be exhausting. Additionally, transportation costs for employees are typically higher due to the distance from the city and the unreliable nature of public transportation to and from the airport.

To retain employees, airport restaurants may need to offer higher wages or other incentives, increasing staff expenses. They may also need to provide parking permits, as airport parking fees can be expensive. For example, employees at Seattle International Airport pay $75 per month for parking, a cost that is usually covered by the employer and ultimately passed on to the customer.

The high turnover rate in restaurants also contributes to higher hiring costs. Each time an employee leaves, the business incurs costs associated with recruitment, training, and background checks. Background checks are particularly important at airports due to strict security measures, and these checks can cost up to $100 for extensive ones.

The combination of high turnover rates, challenging work hours, and transportation costs results in higher hiring costs and staff expenses for airport restaurants, which are reflected in the prices charged to customers.

Background checks and employee vetting

McDonald's is a large company with a diverse range of roles and locations, so the background checks and employee vetting processes can vary. However, as a large corporation, they do have specific procedures in place to ensure the safety and security of their customers, employees, and brand.

Firstly, it is important to note that McDonald's collects extensive information during the application process. This includes contact details, work experience, educational background, references, and interview notes. They also collect optional demographic information, such as gender, race, ethnicity, disability status, and sexual orientation. This initial screening allows them to assess candidates' suitability and qualifications for the role.

In terms of specific background checks, there is some variation in reports from employees. Some sources indicate that McDonald's does conduct background checks, especially for roles in the USA. These checks may include criminal background screening, educational background checks, and drug and alcohol testing. However, other sources suggest that background checks are not always conducted, particularly for hourly employees.

It is important to note that McDonald's also has specific privacy policies in place, especially regarding the collection, storage, and sharing of applicants' personal information. They outline the purposes for which the information is used, such as assessing qualifications, contacting references, and carrying out background checks. Additionally, McDonald's states that they will only share information with third parties who assist in the recruitment process or when required by law.

McDonald's also collects and retains information through their websites and mobile apps, including cookies and similar technologies. They use this data for various purposes, such as improving their products and services, monitoring system performance, and personalizing content.

In summary, while there may be some variation depending on the role and location, McDonald's does have comprehensive procedures for employee vetting and background checks. They collect extensive information during the application process, conduct various types of background checks, and have strict privacy policies in place to handle applicants' personal information securely.

Storage rental fees

Airport restaurants operate with limited space. They have room for only some of the cooking appliances and a little bit of storage space. Due to this, they lack storage space to keep their supplies and are forced to either rent another space in the airport or find a storage system nearby. This becomes expensive for a few reasons.

Firstly, there is the rental cost. The restaurant will need to take on another monthly rental fee for storage. Depending on how much storage space they need, this could become quite costly. If the storage facility owner does a lot of business with restaurant owners, they will know how desperate those owners are for space. They can charge premium rental fees, knowing that the restaurant will likely pay it. If they are the most convenient choice, they can ask for a high rental fee.

Secondly, renting storage space requires the restaurant to send employees out to get supplies when they are running low. This impacts the business because it means they are one employee down. It takes time for the employee to get the supplies, pass through security, and return to the restaurant. Meanwhile, because they are one employee down, the restaurant is unable to serve customers as quickly. They might lose some customers if the line becomes too long and people don't want to wait.

In addition to the costs of renting storage space, airport restaurants also face high delivery expenses. Suppliers usually have to pay parking fees since they are not associated with the airport itself. Then, the supplier has to pass through security to get to the restaurant. Even their crates and boxes will likely be subjected to some form of security check to ensure they are not smuggling any unwanted items. The process is long and annoying, and suppliers charge a high price to bring their goods to airport restaurants.

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