"It is a very counter-cyclical industry," Burger King (BKC) Chief Executive John Chidsey told Reuters. Have a look at the menu at the fast food chain or at larger competitor McDonald’s (MCD). A person can eat well on $25 a day, or even less if they go for the "value meals". The food may not be healthy, but it is filling.
Over at Nintendo, the video game company reported record earnings and revised upward its estimate for sales of its Wii for the fiscal year ending in March. The firm now expects 18.5 million units to be sold up from an earlier figure of 17.5 million.
The video game industry shows that even a modestly expensive product can sell in large volumes in a weak economy if its value is clear. Video game consoles sell for $200 to $500. Video games are under $100. But, heavy video game users play for hours a day. That means the net cost of the products is in the pennies a day. Even modest gamers are probably not investing more than $1 a day over the course of a year.
It is only now becoming clear what items consumers will buy in a tight market and which they won’t. Fast food and Madden 2008 made the cut.
Douglas A. McIntyre
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