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Comment by tmellon2 | Hacker News Reader

My considered take on the McFlurry machines is that it's products are primarily a loss-leader for McDonalds. Folks are attracted by the low-priced dessert offerings from the McFlurry machines (which conveniently don't work), so somehow psychologically the attractor remains and is a factor in walking in decisions. Obviously these machines cannot be broken all the time everywhere in the world - but they are ! IMHO Johny Harris's take on the matter does not address the 'loss-leader' / Psychological reason that I put forward.

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>Johny Harris's take on the matter does not address the 'loss-leader' / Psychological reason that I put forward.

Well, some data would be advisable. Is it a loss leader? Is their ice cream priced lower than wendy's, burger king, in-n-out or similar? To the best of my knowledge, none of those places have this problem.

In my observation, in international markets the price of a McDonald's soft-cone dessert is 1/6th of their primary burger ! Source (for example): https://menuprice.co/in/mcdonalds-menu . The pricing is simply unsustainable if folks walk in only to purchase the soft-cone. The clever marketing folks understand this underlying 'loss-leader' dynamic. The consumers would not tell you this explicitly - as it would appear to be 'cheap' on their part, but consider it a good-deal whenever the 'McFlurry' machines work. Further it has been shown sugar is pretty addictive.

What does the price of a cone in relation to the price of a burger have to do with a cone being a loss leader or not? The price of a burger has absolutely nothing to do with their costs on the cone.

If the cone is profitable to sell, then it's not a loss leader and they have every incentive to sell as many of them as they can.

The cone is not profitable at about 25 to 30 Cents US (including local taxes) in international markets - where dairy ingredients, stable electricity and store front rental in a fancy location are expensive. The burgers (about $2.50 USD) on the other hand rake in 100-200 % profits. Regular Coke sells at about $1 USD; again comparable to US market prices.

> dairy ingredients, stable electricity and store front rental in a fancy location are expensive

Two of those three are not really marginal costs. Yes, it costs electricity to make the food, but _stable_ electricity is something you already need in the biz, same as rent. If you need a generator, you already have one.

Also, enlighten me: are markets where electricity grids are unstable the same ones where retail space is expensive?

I speak primarily of international markets. For example : All of Burger King's desserts are priced 3x times that of McDonald's soft cone - which is evidently a loss-leader. Source : https://menuprice.co/in/burger-king-menu & https://menuprice.co/in/mcdonalds-menu

>Obviously these machines cannot be broken all the time everywhere in the world

I know this is hyperbole, just wanted to add a detail. This is a US-only issue. I don't think I have ever found a broken McFlurry machine in my part of Europe - and I had a LOT of McFlurries in my teenage years. I don't think they use the same Taylor machine here.

Parts of Europe, Australia & New Zealand are examples of well regulated markets and these issues would not crop up there; besides the engineering staff in the above mentioned countries would not participate in perpetuating this now well-known issue.

> loss-leader

The dessert is part of what you are buying. You might as well say the cheese in a burger is a loss leader…

Are you serious? Then why do franchise owners want to get them back up quickly? Wouldn’t the goal be to let it stay down? Why would I ever come for dessert but stay for the burger?

I can get soft serve from QT for .49 cents. I don’t think McDonald’s is intentionally losing money on ice cream to get you to buy Big Macs.

I can only speak for most international markets. It is a loss-leader (calculate prices v/s similar dairy) and you intentionally let the machine stay broken (if it actually is). Some minimum wage worker takes the heat from the consumer, but that's OK. If you do a 'Money-Ball' type calculation, you will find this situation is beneficial. Just Don't tell me McDonald's corporate does not know of this and somehow choose not to provide a long-term fix to the problem. The YouTube video addresses only one angle of this IMHO.

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