Friday, May 03, 2013

Dollar Menus, Dollar Stores, Dollar People

Taco Bell is working on a new dollar menu.  I wasn't aware they were test marketing one in California but I don't get down to Fresno very often.  The taco folks are going up against McDonald's tiny dollar burgers and the low-priced high-calorie stuff you can find most anywhere.  The proliferation of dollar menus says a lot about the shrinking wallets of people who aren't planning meals ahead.  Spending a dollar on a junior-size burger probably delivers less nutritional value per money spent than the same amount spent on a handful of vegetables but most obese Americans don't seem to notice.  I'd rather buy fresh produce, whole grains, and canned goods I can rotate for months.

Have you been to a dollar store lately?  Take your pick from Dollar Tree, Family Dollar, Dollar General, and other regional equivalents.  Junk-addicted consumers can get their fill of cheap plastic goods here after they've stuffed their faces on dollar food at the fast food franchise across the mall parking lot.  Dollar goods are just as low-quality as cheap junk food but Americans don't care.  Our nation seems to like the convenience of buying useless things that break easily.  I hate buying things and I have everything I need to live; the money I don't spend stays in my portfolio working for me.

The problem with catering to lowest common denominator tastes is that retailers can't lower prices to stimulate sales, and can't develop brand loyalty by guaranteeing quality.  McDonald's is learning the hard way  that the dollar menu adds little value to its top line.  Dollar stores have grown so quickly that they've saturated the low-income market and are probably cannibalizing each others' sales.  Fast food chains have learned to take EBT cards to keep their low-information, low-income market hooked.  Dollar stores don't work that way unless maybe they let people use their free government cell phones to swipe a credit card purchase.  Okay, that was a cheap shot (pun intended).  I'm usually pretty cheap but I spend money on things that last.

America is turning into a one dollar nation.  Plenty of people addicted to consumption will spend their last dollar on unhealthy food or unneeded goods.  The psychological barrier of spending "only" one dollar is about as low as you can go.  You are what you eat.  My life is worth more than a buck.

Full disclosure:  No positions in any of the companies mentioned.  I also haven't eaten from a dollar menu in years.