Pricing Chicken Wings

Photo: J Wynia

I stopped by a local fried chicken joint, Harold’s Chicken Shack, the other day.  Just to give you a sense of what sort of restaurant this is, there is a layer of bulletproof glass separating the workers and the customers.  They don’t cook the chicken until you order, so I had five or ten minutes to kill waiting for my food.

One of the items on the menu is a chicken wing dinner.  With each dinner, you get a fixed amount of french fries and coleslaw.

The two-wing meal costs $3.03.  The three-wing meal costs $4.50.

Since the only difference between the two meals is one extra wing, that third wing is costing the customer $1.47.  I thought this was interesting, because if each of the first two wings were priced at $1.47 each, then the implied price of the French fries and coleslaw is a combined 9 cents.  So it seems like Harold’s is implicitly charging more for the third wing than for the first two wings, which is unusual since firms generally give quantity discounts.

I read further down the menu:

2-wing meal $3.03

3-wing meal $4.50

4-wing meal $5.40

5-wing meal $5.95

The four- and five-wing meal prices are more in line with how firms usually price.

So what do you think Harold’s charges for a six-wing meal?  Here’s the answer:

2-wing meal $3.03

3-wing meal $4.50

4-wing meal $5.40

5-wing meal $5.95

6-wing meal $7.00

Definitely most bizarre.  When economists see things that don’t make any sense, we can’t help but think of some story that rationalizes the seemingly odd behavior.  Maybe Harold’s prices the 6-wing meal high because it is worried about obesity?  Not likely, since every item on the menu is fried.  Is the sixth wing especially big or tasty?  Is demand by people who order six wings more inelastic?

Perhaps some clues could be found in the pricing of other items.  Fried perch are sold in a similar fashion to fried chicken, with the choice of two, three, or four piece meals (again with french fries and cole slaw).  Here is how perch is priced:

2-piece perch meal:  $3.58

3-piece perch meal: $4.69

4-piece perch meal: $6.45

So you get that third piece of perch cheap, but they nail you on the fourth piece.  This certainly hints at Harold’s thinking there is some logic to this sort of pricing.

Ultimately, though, my guess is that the person who chose these prices was just confused.  One thing I have realized as I have worked more with businesses is that they are from the idealized profit maximizing automatons of economic theory.  Confusion is endemic to firms.  After all, firms are made up of people, and if people are confused most of the time by economics, why wouldn’t that carry over to firms?

 

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  1. pitcher24 says:

    Maybe the 6-piece meal is very popular. People don’t think of prices the same way you do, so then doesn’t it become supply and demand? 5 piece isn’t as popular as 6 piece, so you up the price of the 6 piece and realize a bigger profit?

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  2. Owinok says:

    Interesting. But I wonder whether the opportunity for arbitrage is being taken by some diners.

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    • peevee says:

      :)
      I wounder what opportunity is there in the wings. Buying 6 5-wing meals for $35.70 and reselling them as 5 6-wing meals for $35? What you have in the end is coleslaw and french fries for 70 cents, which is not much of a deal.
      Now, you could buy 4 more 5-wing meals for $23.80 and resell them as 5 4-wing meals (adding your 70-cent coleslaw and fries) for $27. Here we go, $27-$23.80-$.70 = $2.50. PROFIT!
      :)

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  3. Wastl says:

    The picture suggests you bought the 6-wing meal? :) might that be the answer?

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  4. Brandon says:

    Odd pricing for a Chicago Fav…
    But thinking like their demographic could pay off for them.

    The ‘play’ is that people coming into the store as couples or as kids coming in trying to save a buck would Split the 6 piece into two 3 piece dinners and still save compared to two 3 piece transactions.

    To think about, I may have done the same a few times…

    Anyway, was it good ? ( We get it, Giodano’s, and Portillo’s every time we come home)

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  5. Gary Temple says:

    I came across a similar thing at Burger King in the UK. I ordered a burger plus a drink. i was told it was cheaper to buy a meal, including fries, and then just not have the fries. Which I did. I told them to report back to their head office that their pricing was stupid. I bet they didn’t! We’ve come a long way from pricing to up-sell the customer, giving them more for marginally less, to now down-selling them to give them less for less.

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    • Colin says:

      The person taking your order was probably just wrong. I’ve come across people working the counter at fast food places who believe that it’s cheaper to get the meal, but I don’t think I’ve ever seen an example where it actually is.

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  6. Dave says:

    I think my boss has a side job pricing wings at Harold’s.

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  7. Gary Temple says:

    Doh! It is probably to do with sharing. You can share a 4 pieca and a 6-piece easily, but not a 3 or 5….so the premium is to reflect the lost revenue from selling 2 x lower count meals…so maybe they do know what they are doing after all…

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  8. Dave Kaufman - Techlife says:

    I have seen the same pricing scheme at pizza joints. 1 slice, 2 slices, 3 slices and then you go look at the price of a whole pie and the volume discount isn’t there.

    One theory I have is that maybe the prices start normalized:

    2 wings – 2.99
    3 wings – 3.99
    4 wings – 4.99

    Then they decide to add a 5 wing or 6 wing dinner after the fact, and think “Now’s a great time to raise our prices too.” As they begin to do this, instead of looking at food, labor, fixed costs they try to get into the customer’s psyche. So a manager/owner prices the new meals and then sees a drop in one, so they adjust only that one. Years pass and no one remembers why the prices were altered or what the basis was.

    Great post.

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