September 18, 2021

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.
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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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