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The McRib is Not the Answer

I don’t know what exactly it is a metric of—the economic crisis? healthier eating habits? better taste? the inexplicable success of that extremely annoying actress playing Wendy in the commercials? the cannibalization of its flagship product by the McRib?—but a McDonald’s milestone has been delayed.

According to leading economists and actuarial scientists (McDonald’s itself no longer calculates such things), Ray Kroc’s little hamburger stand was poised to sell its 300 billionth burger this year. But no more.

A recent slowdown has likely delayed that. Sales slowed throughout 2012 and, in October, McDonald’s had its first year-on-year drop in comparable sales since 2003….

A sales rebound in November as a result of new offerings such as cheddar, bacon and onion burgers and the reintroduction of the McRib in December likely salvaged the full quarter from a revenue decline. But menu tweaks will go only so far in addressing a fundamental problem: Fast food isn’t the growth business it once was.

While that is probably a wonderful thing for humanity and for U.S. healthcare costs, it’s not so great for McDonald’s and the rest of the “informal eating out” crowd. But the Kingdom of Arches did, at least, top analysts’ estimates this morning by five cents a share, thanks to the McRib and the Dollar Menu.

Net income increased to $1.4 billion, or $1.38 share, from $1.38 billion, or $1.33, a year earlier, the Oak Brook, Illinois-based company said today in a statement. Analysts projected $1.33, the average of 28 estimates compiled by Bloomberg.

Chief Executive Officer Don Thompson boosted advertising of the chain’s dollar menu items, such as McDouble burgers and McChicken sandwiches, to draw Americans as consumer confidence falls. Sales at U.S. stores open at least 13 months rose 0.3 percent in the quarter. Analysts projected a 0.5 percent drop, the average of 22 estimates compiled by Consensus Metrix.

For actuarial purposes, do McDouble burgers count as two burgers on the long, arduous road to 300 billion?

McDonald’s 300-Billionth Burger Delayed [WSJ]
McDonald’s Profit Rises as Dollar Menu Drives U.S. Sales [Bloomberg]

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46 Responses to “The McRib is Not the Answer”

  1. Guest says:

    Why are actuarial scientists making this calculation? I can see why they'd be interested in how many burgers an individual is eating, but I'm unclear as to why / how they would be calculating how many burgers are being eaten in aggregate.

  2. Matt's Mom says:

    Fewer quotes, more charts!!

  3. Matt's Mom again says:

    Didn't your mother ever teach you never start a sentence with but?

  4. Guest says:

    Being the CEO of McDonalds seems like an easy job. Stop selling the McRib in one quarter – celebrate the increase Big Mac sales; start selling the McRib next quarter – celebrate overall revenue growth. Rinse, repeat.

  5. Danker_Banker says:

    The guy sitting next to me on the plane with the seat belt extender is proud to be doing his part in reaching 300B

  6. Guest says:

    Shazam ! Shazamwdich.

  7. Im_a_Dude says:

    Jon, do you know what they call a Big mac in Paris?

  8. Guestalt says:

    Matt writes an interesting article about shadow banking, and Shazar writes about the McRib. That's about right. Shazar's becoming a fucking caricature of himself

  9. Administration says:

    How DARE you question my incompetence, negligence and lies! I am a member of the Obama Administration, and EVERYTHING we have done is the fault of the REPUBLICANS!

    ~Any Member of the Obama Administration

  10. Guest says:

    I would like one McRib and a chocolate Shazake please.

    -Leroy Jenkins

  11. Fine, I'll say it says:

    I happen to know everything there is to know about McRibs. I love McRibs. I love McRibs with French Fries. I love them with a large Coke. And I take McRibs and put them in my hair when I've had a rough week. What do you think holds it up, slick?

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    • Quant me maybe says:

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  13. VonSloneker says:

    Agree to disagree…red is smokin'

  14. Deleveraging says:

    Do your shareholders and society a favor. Cut your menu to one item, coffee. If you need to run promotions; have box burning contests.

  15. Jon's mom says:

    Jon sucks.

  16. Guest says:

    The redhead in the Wendy's commercials actually is Wendy Thomas…

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