Tampa boasts McDonald's menu pricing guru
Wake up and good morning. The success of the McDonald's fast food empire in such a rough recession, especially for restaurants, has not gone unnoticed. So when a Tampa consulting firm counsels McDonald's franchisees to raise menu prices more this year -- perhaps a counter-intuitive move in a recession -- there's more than passing curiosity riding on such a recommendation in a price-sensitive niche. (Photo: One committed McDonald's customer in Tampa, by Daniel Wallace of the St. Petersburg Times.)
Tampa's Revenue Management Solutions works with McDonald's franchisees in 30 countries including the United States. Its presentation materials say the firm's strategies have boosted profits at 7,000 U.S. outlets in the past four years, reports Crain's Chicago Business.
RMS chairman and CEO Thomas Kelly, a leading industry expert on menu pricing, told Crain's, "We are very good friends with the folks in Oak Brook" -- where McDonald's is headquartered. Kelly's firm develops pricing strategies for restaurants by looking at local demographics, competitors' prices and demand for each item at different times.
Kelly (in photo, courtesy of RMS) co-founded the company in 1994. He says the primary goal is to adjust prices without losing customers.
And the Tampa firms' recommendations to McDonald's? Raise the maximum price increase to 30 cents per item from last year's 20 cents -- not including the items on McDonald's "dollar menu," Crain's reports. RMS also suggested that price hikes match the government-estimated rate of inflation in restaurant prices, rather than trailing the index as the firm advised in previous years.
Who is this guy? Kelly spent more than 30 years teaching hospitality management, mostly at Cornell University. He's also served as the director of hospitality management at the University of Minnesota-Crookston and taught in France, Brazil and Singapore. Among the projects he's worked on: advising the Port Authority of New York on leasing Windows on the World, relocating the restaurant Le Cirque to the Palace Hotel for the royal family of Brunei, developing hotel properties in Florida, assisting the Irish Tourism Commission, writing the restaurant rating criteria and training the inspectors for the American Automobile Association (AAA), and administrating the Distinguished Restaurants of North America Award inspection program and the Mobil Guide inspection program from 1998 through 2001.
-- Robert Trigaux, Times Business Columnist