H McKee Stewart Jr

Musings on Business, Finance, and Economcs.

The McRib: A Product of Hog Arbitrage?

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Well, assuming that actual hog meat is involved…… From Willy Staley at The Awl:

Fast food involves both hideously violent economies of scale and sad, sad end users who volunteer to be taken advantage of. What makes the McRib different from this everyday horror is that a) McDonald’s is huge to the point that it’s more useful to think of it as a company trading in commodities than it is to think of it as a chain of restaurants b) it is made of pork, which makes it a unique product in the QSR world and c) it is only available sometimes, but refuses to go away entirely.

If you can demonstrate that McDonald’s only introduces the sandwich when pork prices are lower than usual, then you’re but a couple logical steps from concluding that McDonald’s is essentially exploiting a market imbalance between what normal food producers are willing to pay for hog meat at certain times of the year, and what Americans are willing to pay for it once it is processed, molded into illogically anatomical shapes, and slathered in HFCS-rich BBQ sauce.

Read the whole thing. An interesting, if slightly stomach churning, way to think about the QSR business.

HT: Alex Tabarrok at Marginal Revolution.

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Written by hmstewartjr

10 November 2011 at 8:03 PM

Posted in Uncategorized

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