The nachos are good…

…but the 89 cent chicken burritos are better. Via Andrew, I see that Sarah Hepola over at Salon is checking out the value meals at various fast food establishments. As far as I’m concerned, McDonald’s still reigns supreme in this regard: 2 double cheeseburgers and a 16 ounce diet coke for $3 (plus tax) pretty much can’t be topped…though Taco Bell is trying hard. Their value menu is simply absurd. I myself got two chicken burritos (89 cents apiece) and a three layer nachos (79 cents) just yesterday. Hepola asks how these prices leave the restaurant profitable. It’s easy: They don’t.

Fast food restaurants get you in the door with cheap deals on food in the hopes that you’ll buy a soda. Soda is the great secret moneymaker of the fast food business: Even if you get the cheapest choice off the value menu (like, say, the aforementioned 16 ounce diet coke for a buck from Mickey Ds) the joint is making something like 85 to 90 percent profit on the beverage. The ingredients — syrup and soda water and ice — don’t cost much, and the cups/lids/straws are bought in huge quantities, giving the restaurants a nice bulk discount. When you add all that up, the 16 ounce coke you just paid a dollar for only cost the restaurant something like 15 cents. Profit margins are even higher on the larger sizes. So even if they lose a little on the taco/double cheese burger/chicken sandwich, the restaurant makes all that and more up in the soda you purchased.

This is why the cashier, if they’re properly trained, will always ask “Would you like a Coke with that?” It’s why they’ll always ask if you want to upsize the meal, because that extra 60 cents or whatever is almost pure profit.