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I don't think many people here realize just what a gargantuan feat it would be for McDonalds to change their menu. If they went organic grass feed beef one day
by chollida1 12y ago
I don't think many people here realize just what a gargantuan feat it would be for McDonalds to change their menu.
If they went organic grass feed beef one day they would need the entire 20 years of the entire US organic beef production to fill their first year needs.
When they roll out a new topping, like spinach, they have to build up reserves for months ahead of time so they don't affect the market.
The down side of being McDonalds is that they are so mind boggling huge that they can raise or lower the pirce of pretty much any vegtable by adding it to their menu.
The upside of being McDonalds is that they are so mind boggling huge that they can change the course of American farming by decreeing that they will only use certain types of vegetables or vegetables only produced under certain conditions.
Think about the intestinal fortitude you would need to change McDonalds menu in any drastic way. McDonalds is 4 things:
1) One of the largest derivatives players that isn't doing it as their main source of revenue, ie they aren't a hedge fund. You will directly affect the commodities market.
2) One of hte largest property holders in the world, if your bet goes wrong you'll screw up what is in effect one of the worlds largest REITS.
3) an employer of a mind boggling large number of people. Make the wrong move and you just put a alrge portion of the lower wage community out of a job.
4) a company worth 94 billion by market cap. When you run a company that large you don't get to make brash decisions without the boards approval.
So if you make the decision to improve the quality of food you serve, you'll have a few side effects.
1) you'll shock the commodities markets, maybe this is good or bad, not sure. But it will take you a minimum of 3 years I'm imagining before you can see meaningful change as food contracts are usually long term.
2) you'll run a very real risk of pushing someone else out of the market as there is only so much of each food substance produced. ie if McDonalds announced they were only going to use a better quality of chicken and beef then the first thing I'd do is short chipotle, and short them hard, as if a supplier has the choice of upsetting McDonals or Chipotle, they will short change Chipotle every single time.
3) you run the risk of alienating your bread and butter customer, lower income people who are price sensitive to hamburger prices going from $1.50 to $3.
4) You are a dividend paying company, which means the market doesn't expect growth in any area expect your dividend. Fail in this regard and you will be punished heavily. If you fail in your better food quality push you may just shave off 20 Billion in market cap.
TL/DR it takes alot of courage to change the MCDonalds menu!!
- nness 12y agoThe other thing I find interesting is that McDonalds is a common dietary substitute for those with a low-income. If they were to increase quality (nutritional content) or increase price, it could have a meaningful effect on obesity.
- AlexeyBrin 12y agoMcDonalds is a common dietary substitute for those with a low-income It is really hard for me to understand this line of reasoning. I lived in Canada as a foreign student a few years ago and it was way cheaper to cook for yourself than to eat at a McDonald. Maybe the situation is different in US, but I doubt it.
- dragonwriter 12y ago> I lived in Canada as a foreign student a few years ago and it was way cheaper to cook for yourself than to eat at a McDonald. Maybe the situation is different in US, but I doubt it. McDonald's isn't cheaper than cooking for yourself, but time constraints (consider a single parent with multiple jobs) and/or the up-front costs when bits of your cooking infrastructure is lost, broken, damaged may make the marginal cost of getting the next meal from McDonald's cheaper than the cost of repair plus the next meal. Given that the poor may have limited access to additional credit and litte-no reserves, that marginal cost difference may make McDonald's the only affordable choice, even though the long-term cost is higher.
- AlexeyBrin 12y agoThe time constraint I could understand. However, the cooking infrastructure argument doesn't hold water two people eating at McDonalds once a day could easily spend $600 monthly. You can buy some cheap, second hand, fridge and stove easily with this amount.
- greedo 12y agoDollar Menu...