I have to put this out there regarding pizza. There are 46 "Ray's Pizza" in nyc, not a franchise, just a bunch of different people calling themselves "Ray's Pizza". Funny as hell and only in New York. Links not working, google Ray's pizza wiki
Your definately right on this, the cost probably triples once they (fast food joints) factor in the amount of food they throw in the garbage. However the margins are still astronomical when it comes to the soda they sell, people think pizza margins are ridiculous, but fast food crushes them in terms of that. I would love to hear the margins on coffee shops, they probably dont even factor in the cost of coffee, LOL. 3 dollars for a coffee which is probably worth 1 cent, starbucks and other coffee shops must be laughing their ass off at stupid people willing to pay these prices.
Yes, the margins on paper are ridiculous but just like trading, there is no free edge out there. What happens is, because you are "buying into a brand" they rape you on costs. So yes, the "corporation" itself, whether it be McDonalds or Starbucks make a killing, I guarantee you that corporate is not selling the food to the franchise owner at that price. That one cent soda probably costs the franchise owner 60 cents. Yes, they rape them. If this were an option, you could say the premium is priced into what you are getting. That's why a lot of guys just try to start their own place. Then you can actually try to get food at costs and earn the markups. Of course the risk is who wants to take a chance on "Hello Pizza and Coffee". So you are going to have to run promotions around the clock to get people to try your product. Yeah it sucks man, most these markets are pretty efficient, just like trading. The real edge I think though is running these things in large college towns.