News
McDonald’s facts draw attention to its problems: Chart of the Week
This is the summary of today’s morning summary, which you can sign up to receive in your inbox every morning along with:
It’s never a good thing when executives of a multibillion-dollar consumer start arguing on the Internet. Even if they are right.
McDonald’s found itself in the spotlight this week as a victim of its own prices when News of a (real) $18 Big Mac meal has social media buzzing, the high price of a renowned low-cost fast food chain surprising.
And, true to form, fact-free “information” about inflation fueled the flames. Even House Republicans’ Bill X got in on this, joining the growing chorus claiming Big Mac prices have doubled since the pandemic.
With inflation changing so many prices, it seems like no one knows how much anything costs anymore.
The Big Mac moment precipitated a rapid expeditionary force of “actually” correctives from financial commentators and the company itself.
“In fact,” Big Mac prices have risen 21% on average since 2019, less than the 23% inflation and the 28% food inflation. And wages for non-supervisory workers rose 28%, says Nobel-winning economist Paul Krugman pointedsuggesting that, in real salary terms, paying for a burger hurts less.
Our Chart of the Week shows it all – the real data.
But the most important “actually” came from the president of the network in the USA, Joe Erlinger.
“I am frustrated and concerned, and so are many of our franchisees, when I hear about an $18 Big Mac meal being sold — even if it was in one U.S. location out of more than 13,700,” Erlinger wrote in an open letter.
“More concerning, however, is when people believe this is the rule rather than the exception, or when they begin to suggest that Big Mac prices have risen 100% since 2019,” the executive added, noting that the company “must remain focused on value and affordability.”
For investors, the very appearance of the letter may convey a touch of desperation and defensiveness. And this after the company’s results last month disappointed investors as their customers spent and visited less.
A look at your stock chart shows why.
The stock is up just 28% over the past five years, just in line with many of its clients’ raises. This is an insignificant gain compared to the 90% return of the S&P 500, which we left off the chart as it would change the scale of the chart by almost an order of magnitude.
The $18 Big Mac tweet showing a view count approaching half a million could also be another example of the Streisand effect, drawing a lot of attention to a literally nothing-burger.
The story continues
But Erlinger is clearly concerned that the company’s current situation is delicate, and chatter on social media about McDonald’s not being accessible has prompted his team to spring into action.
With its jingles, Dollar Menu, Value Meals, clown and Billions Served, McDonald’s has always been as much a marketing company as a burger chain.
And despite this strange open letter on the investor relations page, it’s hard not to imagine that the company will get the message across to its real customers. We’ll see in a quarter if that makes a difference.
Ethan Wolff-Mann is a senior editor at Yahoo Finance and runs newsletters. Follow him on Twitter @ewolffmann.
brief morning image
Click here for in-depth analysis of the latest stock market news and events that move stock prices.
Read the latest financial and business news from Yahoo Finance