When gas prices fluctuate obviously the cost of a burger (to the manufacturer) fluctuates as well since they need to truck the cows, meat etc. Do you think their burger prices fluctuate alongside increases/decreases in gas prices?
Of course, although the effect on prices will be less immediate and less drastic.
why do you think McDonalds doesnt charge 1.50 a burger instead of $1. Do you think its because they dont think that 1.50 is a fair price since given the cost of meat, labor etc say it comes out to 50 cents a burger and they only deserve 50 cents profit?
Of course not, it’s because they’ll sell fewer burgers and therefore have lower profits. If costs were higher, though, they would profit more at higher prices.
Obviously, this is an oversimplification; for one thing, certain overhead costs may not fluctuate directly with volume. I am working with the assumption that the more burgers you sell, the more people you need to take deliveries, cook them, and sell them.
As an aside I’m not sure how much labor factors in to the price per burger at all. For example, you may or may not now this but Dunkin donuts spends more on the cup then they do on the coffee. If the price of a coffee bean would double it would barely (if at all) effect the price of coffee at all since the coffee is so cheap to the provider in the first place.
I’m not sure what that has to do with labor, which I assume to be a much higher percentage of the cost of a burger than the price of a coffee bean to a cup of coffee.