Axios
Does McDonald’s time McRib releases to the pork price cycle
for a bigger profit per sandwich? From 2005–12, dips in hog prices have
matched up with McRib launches, according to the above chart from
Axios.
But it’s
unclear whether McDonald’s is taking advantage of low pork prices, or
causing them. See those price spikes in the summer leading up to each
release? They seemingly coincide with the announcement of the McRib,
meaning the announcement itself could artificially inflate hog futures.
Another
snag: Is McDonald’s really that agile? One franchise operator told
Freakonomics that McRib launches are planned at least a year out.
Theory #2: Loss leadership
A “loss
leader” is a product that costs businesses more to make than customers
pay for it. Companies choose to take an L on these items in the hopes
that they will lure customers to buy profitable products that recoup the
loss. Think of cheap printers that require expensive ink.
- By that logic, the McRib
could be nothing more than a barbecue-bathed marketing tactic to get
customers through the golden arches. Once inside, McDonald’s makes money
from the drinks, sides, and other items customers buy to round out
their Michelin-star meal.
+ This
theory could tie back to the first one: If the McRib is indeed a loss
leader, McDonald’s would have more reason to take advantage of low pork
prices.
Theory #3: Diminishing marginal utility
This is the
Occam's razor of the bunch: the McRib just isn’t popular enough to be a
full-time member of the menu. According to the same franchise operator
quoted above, McRib rollouts follow a repeating pattern: “First few
weeks we sell nearly 200 per day and near the end we may sell less than
50 per day.” The menu item makes money in limited runs, but becomes less
valuable long-term.
So, put another way…
The McRib’s a Supreme hoodie, the McNugget’s a North Face fleece
Some
history: In 1981, McDonald’s was struggling to churn out enough
McNuggets. It had overloaded the chicken supply chain, so the same chef
who created those pulverized poultry patties made a similar product out
of pork parts. Eventually, the chicken supply caught up to McDonald’s
demand, while the McRib’s popularity waned.
If McRibs
were as popular as McNuggets, it’s feasible they’d also become a forever
menu item and the pork industry would play catch-up like chicken had.
Ergo, McRibs probably just aren’t as popular.
Bottom line: Any combination of these theories could be true. But the mythos matters more than the truth, because all of these guesstimations contribute to the McRib’s biggest value-driver: hype.
|
I AM A REPUBLICAN BORN AND BRED
IN AMERICA .I BELIEVE IN EQUALITY AND JUSTICE AND THE CONSTITUTION OF THE UNITED STATES.I SERVED IN THE UNITED STATES AIR FORCE
MAJORED IN GEOLOGY AND MUSIC AND WENT TO ANGELO STATE IN SAN ANGELO, TEXAS
No comments:
Post a Comment