Why competing fast-food shops always cluster on the same corner

It looks like a glitch in the matrix when you see a Macca’s, a KFC, and a Hungry Jack’s all huddled on one miserable intersection. You’d think they’d spread out to claim their own turf, but that’s a rookie mistake.

If one shop moves away to be 'closer' to a quiet suburb, their rival just slides into the middle and steals every customer in between. It’s a game of territory where nobody wants to blink first.

By clustering together, they ensure the other guy doesn't get a single inch of an advantage. It’s called Hotelling’s Law, and it’s why your choice of burgers usually happens within a ten-meter radius.

Wait, how does anyone win if they're all huddled in one spot?

When location is a dead heat, you’re in a proper Mexican standoff. Since nobody has the upper hand on distance anymore, the battle shifts from the map to the menu.

This forces them to fight on 'limited time' deals or who can shove a burger through a window the fastest. If you can't be the closest, you have to be the loudest.

It’s a race for the shinier sign or the better loyalty app. You aren't picking the shop because it’s convenient; you’re picking it because their marketing finally wore you down.

Doesn't all that constant shouting and discounting just kill their profits?

Spot on. It’s an arms race where the only real winners are the ad agencies. They spend millions just to keep their slice of the pie from shrinking.

It’s like blokes at a pub. Once one starts shouting, everyone else has to crank the volume just to stay in the conversation. Nobody’s enjoying the chat; they’re just fighting to not be ignored.

If one brand stops the discounts, the crowd immediately drifts next door. They’re trapped in a high-speed chase that keeps the lights on but thins the gravy.

If it's a trap, why don't they just agree to stop the shouting?

You’ve just stumbled onto what the suits call 'collusion,' and it’s a one-way ticket to a massive fine or a jail cell. In most places, it’s highly illegal for competitors to sit down and pinky-promise not to compete because it screws over the customer.

Even if they could dodge the law, the temptation to cheat is too high. It’s like a pact between mates to stop drinking—the second everyone looks away, someone’s sneaking a cold one from the fridge to get an edge on the others.

The moment one shop 'accidentally' drops their price by ten cents, the whole truce goes up in smoke. They’re stuck in a 'Prisoner’s Dilemma' where trusting your rival is the fastest way to go bust.

But if they can't talk, what stops them from just undercutting each other forever?

It’s like a high-stakes game of 'Follow the Leader' where the leader is headed toward a cliff. They don't need to chat over a beer to know that if they keep cutting prices, eventually they’re both working for free.

They use 'price signaling.' If the shop across the road drops their combo by a dollar, you match it within the hour. It’s a silent message that says: 'I see you, and I’ll ruin us both if I have to.'

Eventually, they hit a 'floor'—the absolute minimum cost to keep the fryers running. Once they're there, they realize that cutting further is just suicide. They sit at that painful edge, staring each other down, waiting for the other guy to go bust first.