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McDonalds has every incentive to insist to its shareholders that price increases do not impact business performance. any onlooker --even Wendy herself-- who th

McDonalds has every incentive to insist to its shareholders that price increases do not impact business performance. any onlooker --even Wendy herself-- who thinks otherwise is deluded. McDonalds is routinely lambasted on social media and in memes for its recently gilded pricing. the quality just is not there. I suspect actual sales are flat, or in decline as a response to the price increase. The alternative to scalding a frog is a world where corporations occasionally have to suffer the consequences of inflation as well as consumers.

bananapub 3y ago
> McDonalds is routinely lambasted on social media and in memes for its recently gilded pricing. the quality just is not there. I suspect actual sales are flat, or in decline as a response to the price increase. so...you are assuming their sales are flat or declining based on your sense of the vibe and are assuming they lied in their SEC filings? this is a fairly bold method to analyse the world with.
bdw5204 3y ago
If you're at the absolute bottom of the market in terms of price and quality then your sales are probably somewhat inelastic. Especially if people have to buy your product or a similar product. It's the same reason why prices keep going up at the grocery store. Those companies know you're going to buy groceries anyway and most people are going to buy the name brand instead of the store brand. Where McDonald's runs into trouble is if their prices get so high that you might as well just go to a sit down restaurant instead. Five Guys and Smashburger are getting pretty close to that territory especially with the tipflation added onto their already high prices. The other risk for McDonald's is that somebody else will try to replace them as the replacement level[0] restaurant. If your customers are choosing you because you're the cheapest and fastest restaurant then you can't afford to have a competitor undercutting you on price or speed. That's why it's so surprising to me[1] that McDonald's would be raising their prices aggressively. Even if they improved the food quality dramatically, they're not going to be able to move their brand up market because their existing reputation is well established. [0]: https://en.wikipedia.org/wiki/Value_over_replacement_player https://en.wikipedia.org/wiki/Value_over_replacement_player (McDonald's is basically the restaurant equivalent of this baseball analytics concept) [1]: I virtually never eat at McDonald's so I was completely unaware that they've been jacking up their prices. I don't even know where my local McDonald's is without checking Google Maps.
dahart 3y ago
Because McDonalds is publicly traded, there’s no such thing as “insisting” that performance is fine when they’re not, the sales facts are made public. The company indeed has seen profits recently that were missing from 2014-2020. https://www.macrotrends.net/stocks/charts/MCD/mcdonalds/revenue https://www.macrotrends.net/stocks/charts/MCD/mcdonalds/reve... It is entirely possible for the number of hamburgers sold to go down while the price goes us, and for MCD revenues to stay even or earn more money. That might lead to a hollowing out of their customer base, and could lead to eventual decline, but there’s no guarantee of that. McDonalds also has a lot of incentives to try to escape the rock-bottom commodity pricing, if it can, and regardless of quality, some companies do charge “market rates”. Apple and Starbucks come to mind. Starbucks is a good example of a company that took a cheap commodity product and pushed the price up considerably without suffering decline; the primary consequences were mountains of profit.

bananapub 3y ago

> McDonalds is routinely lambasted on social media and in memes for its recently gilded pricing. the quality just is not there. I suspect actual sales are flat, or in decline as a response to the price increase. so...you are assuming their sales are flat or declining based on your sense of the vibe and are assuming they lied in their SEC filings? this is a fairly bold method to analyse the world with.

bdw5204 3y ago

If you're at the absolute bottom of the market in terms of price and quality then your sales are probably somewhat inelastic. Especially if people have to buy your product or a similar product. It's the same reason why prices keep going up at the grocery store. Those companies know you're going to buy groceries anyway and most people are going to buy the name brand instead of the store brand. Where McDonald's runs into trouble is if their prices get so high that you might as well just go to a sit down restaurant instead. Five Guys and Smashburger are getting pretty close to that territory especially with the tipflation added onto their already high prices. The other risk for McDonald's is that somebody else will try to replace them as the replacement level[0] restaurant. If your customers are choosing you because you're the cheapest and fastest restaurant then you can't afford to have a competitor undercutting you on price or speed. That's why it's so surprising to me[1] that McDonald's would be raising their prices aggressively. Even if they improved the food quality dramatically, they're not going to be able to move their brand up market because their existing reputation is well established. [0]: https://en.wikipedia.org/wiki/Value_over_replacement_player https://en.wikipedia.org/wiki/Value_over_replacement_player (McDonald's is basically the restaurant equivalent of this baseball analytics concept) [1]: I virtually never eat at McDonald's so I was completely unaware that they've been jacking up their prices. I don't even know where my local McDonald's is without checking Google Maps.

dahart 3y ago

Because McDonalds is publicly traded, there’s no such thing as “insisting” that performance is fine when they’re not, the sales facts are made public. The company indeed has seen profits recently that were missing from 2014-2020. https://www.macrotrends.net/stocks/charts/MCD/mcdonalds/revenue https://www.macrotrends.net/stocks/charts/MCD/mcdonalds/reve... It is entirely possible for the number of hamburgers sold to go down while the price goes us, and for MCD revenues to stay even or earn more money. That might lead to a hollowing out of their customer base, and could lead to eventual decline, but there’s no guarantee of that. McDonalds also has a lot of incentives to try to escape the rock-bottom commodity pricing, if it can, and regardless of quality, some companies do charge “market rates”. Apple and Starbucks come to mind. Starbucks is a good example of a company that took a cheap commodity product and pushed the price up considerably without suffering decline; the primary consequences were mountains of profit.