On a high level perspective you're right. COGS are increasing and deteriorating the profit margin. But if you dig a level deeper, the issue is not in a simple increase in COGS (e.g. meat getting more expensive), but in a shift in product mix.
The burgers have a negative margin - meaning you're loosing money on every sold burger. The case mentioned the burgers were only introduced recently (and I've seen other versions of this case that also called out specific promotions for the burger), driving down overall margin by increasing the share of revenue contributed by a negative-margin item.
Ergo: It's not that the COGS on a unit-by-unit basis have increases, you're shifting your product mix towards less profitable products, increasing total COGS.
On a high level perspective you're right. COGS are increasing and deteriorating the profit margin. But if you dig a level deeper, the issue is not in a simple increase in COGS (e.g. meat getting more expensive), but in a shift in product mix.
The burgers have a negative margin - meaning you're loosing money on every sold burger. The case mentioned the burgers were only introduced recently (and I've seen other versions of this case that also called out specific promotions for the burger), driving down overall margin by increasing the share of revenue contributed by a negative-margin item.
Ergo: It's not that the COGS on a unit-by-unit basis have increases, you're shifting your product mix towards less profitable products, increasing total COGS.
The MBB Case Interview School 
