Anyone who has read Be Unreasonable knows how I feel about price cutting and the best response to it, so I was happy (and surprised) to read McDonald’s founder Ray Kroc felt the same way.  In 1960, one of his Knoxville franchisee was being hammered by a competitor offering five hamburgers for thirty cents. Can you imagine, thirty cents! Even so, the customers still came over to McDonald’s for the fries and shakes. So the competitor hit harder - with a hamburger, milkshake and fries for ten cents.  The reasonable response would have been to cut prices and at least match the other guy’s offer  – following him down the road to pricing ruin. 

Ray’s response? 

“If we can’t do it by offering a better fifteen-cent hamburger, by being better merchandisers, by proving faster service and a cleaner place, then I would rather be broke tomorrow and start all over again in something else.”