Going to the Bell
Posted on September 23, 2008 - Filed Under Business |
Clifford: I’ll have the Grilled Stuff Burrito, a soft taco supreme, and a medium soda.
Taco Bell is decidedly not my preferred hang out. Any place that does nothing but manufacture cheap bar food definitely does not rank highly on my eateries. If you squeeze a bean burrito just right, it looks like baby pooh. So why was I lunching at “¡Yo quiero Taco Bell“?
Research.
Mentor: You need to study Glenn Bell’s model about the value menu.
A huge discussion poured forth, during one of the coffee shop conversations. We started chatting about how to effectively price a product to not only maximize sales but maximize profits. This directly lead to a conversation regarding fast food chains and their value meals.
In Glenn Bell’s case, he figured out the Value Menu. 39 cent tacos? 20 tacos for 3 bucks? Does anyone remember those party packages?
The theory: maximize revenue by selling in volume.
For my product line, I take a look at what others are doing. This guy is selling his “book” for $179. OK that’s fairly impressive. A lot of paper, a lot of forms, and a nice 3 ring binder. After all the material has been developed, how much does it take to print and store all those goodies? Packaging and shipping? Maybe $40 or $50 per “book”?
His eBook comes in at $99.95. His costs associated with selling the eBook: $2.10. Not bad for doing nothing. It is evident the author has decided to maximize profits and forsake volume.
For the average bear, paying $99.95 for an ebook is a lot. Especially in today’s market when people are resisting big purchases in lieu of the economy. Also the average bear understands that ebooks are significantly cheaper than their physical counter parts. The author must work that much harder to convince people to part with that $100 bill.
How much would his sales increase if he cut the price to 1/3? Would his sales increase ten fold?
Two hundred and forty dollars per person is what “The French Laundry“, one of the world’s best restaurants, charges. A far cry from the $5.49 I paid for my Taco Bell lunch. But the 50 people who followed me into the joint more than made up revenue that the French Laundry might see.
I couldn’t finish my burrito.
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Several of my family members used to work for YUM! YUM is amazing at marketing. They go for more than just low prices. They solve “problems”. If you have a family and one kid wants a hamburger and one wants chicken, you can pull up to an A&W/KFC or Long John Silver/Taco Bell or any other crazy combo.
Is that the reason behind those mutli-restaurant stands? I guess that would make sense. I’m now wondering if the same person owns all the franchised restaurants or if each one is separate . . . how that whole competition things works . . .
Cliffords last blog post..For the long haul