Comments on: Understanding McDonald's as a commodities broker with a restaurant sideline: the McRib

By: tmdpny

tmdpny — Sat, 12 Nov 2011 17:34:00 +0000

I’m not surprised by this theory because my uncle was the CFO for a large group of supermarket chains. He would take the gross receipts from the day and leverage them on the overnight exchange market, adding a huge profit to the day’s sales. Without this, their profit margins were almost too thin to operate. I am sure financial leverage – either through supply of basic materials or through same day sales – is a major portion of most retail.

By: Luke

Luke — Fri, 11 Nov 2011 13:19:00 +0000

But the fact they are available in Germany all year round ties in with this theory given the Germans love of pork and pork products as it means there is cheap enough meat on the German pork market.

By: S P

S P — Fri, 11 Nov 2011 09:41:00 +0000

That’s not arbitrage. It’s an intermarket spread. Arb would be simultaneously buying cattle in one place while selling for a higher price elsewhere.

By: Maddy

Maddy — Fri, 11 Nov 2011 04:56:00 +0000

I fear the Duke Brothers hand in all of this, shortly after they got an erroneous crop report …

By: Greg Van Antwerp

Greg Van Antwerp — Fri, 11 Nov 2011 01:59:00 +0000

On November 19th it will be exactly 9 years since I have eaten in McD, or BK, KFC, ETC! It’s not food, so why would you eat there if you were hungry? I’ll try not to get all farmy on you, but think for a minute if Franchises didn’t exist… All those privately owned burger stands and sit down restaurants all using local farms for meat and veggies…o! wow! sorry, I was dreaming there for a sec. It’s gone now-just a dream.
http://videomartyr.blogspot.com/

By: caipirina

caipirina — Fri, 11 Nov 2011 01:47:00 +0000

say what you will .. I LOVE the McRib … and yes, countries like Germany have it all the time (conspiracy theory there? constant fear of mad cow desease) …

Since I never have the time to do a pulled pork, that is as close at i can get … well .. no I live in a country that does not even have a McDs …

By: Palomino

Palomino — Fri, 11 Nov 2011 01:27:00 +0000

I call B.S., I think it’s their sausage patties (meat) with McRib sauce.

Americans thrive off of “For a Limited Time Only” and buy it, even if they don’t want or need it.

Even this post boost’s McDonald’s internet rating.

By: James Gettinger

James Gettinger — Fri, 11 Nov 2011 01:24:00 +0000

Selling a sandwich is not arbitrage. Short cattle, long hogs is arbitrage.

http://www.financeandmagic.com/2011/11/mcrib-arbitrage-its-all-in-spread.html

By: sam1148

sam1148 — Fri, 11 Nov 2011 00:25:00 +0000

Ironically, if Heston Blumenthal created a similar dish; using ground pork and offal and reshaped with Transglutaminase (aka Meat Glue) and cooked sousvide and served on a miniature ciabatta bun with pickles and a BBQ sauce thickened with agar agar and agave nectar. It would only cost about 20 dollars and yet basically be the same thing chemically speaking and be praised for its economy of using tail to snout transformations for foods.

By: lecti

lecti — Thu, 10 Nov 2011 23:13:00 +0000

“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.”

Why is the quoted article worded so strangely? All the above sentence is saying is that McDonald is buying pork at a bargain price that people would like to pay for fast food. Throwing in verbiage like “violent”, “exploiting”, “brute-force”, and “taken advantage of” didn’t really convince me that the restaurant franchise should be called a commodities broker than just restaurant franchise with a lot of money. For the name change to happen, it has to be both buying AND selling raw pork material, in addition to cooking and selling pork sandwich.

Am I missing something here??

By: Optic

Optic — Thu, 10 Nov 2011 23:07:00 +0000

For what it’s worth, Marginal Revolution linked this too, and included the chart that suggests a simpler explanation: McDonald’s likes to make the McRib available every October. They skipped 2009, but that can’t be explained by the cheap pork theory either — it’s the lowest price point since 2005.

http://marginalrevolution.com/marginalrevolution/2011/11/the-mcrib-arbitrage.html
http://www.theawl.com/wp-content/uploads/2011/11/pork-e1320757338994.jpg

The needless invocation of “conspiracy” (really, buying low and selling high is a conspiracy?) along with extraneous troll-words like “violent” and “sad, sad end users” sets off my “axe to grind” alarms.

By: jinxyblastwave

jinxyblastwave — Thu, 10 Nov 2011 22:57:00 +0000

He still had the idea though…

By: Stefan Jones

Stefan Jones — Thu, 10 Nov 2011 21:15:00 +0000

McRibs were available in the Portland area a year ago this month. (I had to check my “sent mail” box to get the date.)

The taste wasn’t bad. The texture and mouth-feel were kind of odd. A little firmer than a hot dog, way mushier than a McD burger. I looked at the interior of the “meat” with the sauce sucked off. It looked “bubbly,” kind of the way the inside of a thick pancake looks.

I won’t be buying another.

By: Spieguh

Spieguh — Thu, 10 Nov 2011 20:50:00 +0000

I broke down and had a McRib for the first time last night. It tasted exactly like…nothing. The sauce was sweet with no discernible flavor, the meat packet had less texture than firm tofu…what’s all the fuss about?

By: Brian Whittle

Brian Whittle — Thu, 10 Nov 2011 19:32:00 +0000

McDonald’s that’s classed as food now? Who would have thunk it

By: Mycroft

Mycroft — Thu, 10 Nov 2011 19:12:00 +0000

“sad, sad end users who volunteer to be taken advantage of.”

Oh, wow, I didn’t know I was being taken advantage of when I ate a thing I enjoy once in a while. One that is convenient and reasonably cheap. I’ve been living a lie apparently.

By: Art

Art — Thu, 10 Nov 2011 17:38:00 +0000

Thank you, Cory, for the insight here. I will quoting your article to friends all week!

By: Quiche de Resistance

Quiche de Resistance — Thu, 10 Nov 2011 17:34:00 +0000

If you think the pork has been mistreated, you will be aghast when you find out what’s been done to those slices of cucumber they serve on a McRib.

By: taintofevil

taintofevil — Thu, 10 Nov 2011 17:32:00 +0000

You think you are kidding, but there is a large, sad man in a tiny hut in the parking lot of the Firehouse Subs near campus who will buy your gold jewelry so that you might then buy a sandwich.

By: irksome

irksome — Thu, 10 Nov 2011 17:28:00 +0000

“Does that mean I can trade my old gold jewelry in exchange for McRib sammiches?”

You CAN. That doesn’t mean you SHOULD.

Here’s a suitable analogy: I can get a McRib when available. Should I? No; and yet, despite the inevitable gastro-intestinal distress, I DO.

By: Quiche de Resistance

Quiche de Resistance — Thu, 10 Nov 2011 17:22:00 +0000

Pork? I thought it was made from something smaller, and with more legs.

By: Rayonic

Rayonic — Thu, 10 Nov 2011 17:19:00 +0000

That’s kind of a pointless conjecture. McDonald’s doesn’t make money buying and selling real estate. They mainly make money from their restaurant business. That’s how (and why) they pay for the real estate.

It’s just a lame rhetorical device for saying “McDonalds isn’t a food company!”

It’s like saying GM is mainly a retirement benefit company.

By: aynrandspenismighty

aynrandspenismighty — Thu, 10 Nov 2011 16:42:00 +0000

Don’t care. I know they’re crap slathered in garbage. But dammit I like ‘em.

By: Rayonic

Rayonic — Thu, 10 Nov 2011 16:34:00 +0000

I don’t really understand the aversion to meat slurry. Wherever it came from now it’s just protein paste — homogenous and sterilized.

Kinda reminds me of gelatin actually; and I can eat a cup of Jello without thinking about all the bones and hides that went into it.

Oh, and food dyes are great example too. By the time I’m eating Cochineal (http://en.wikipedia.org/wiki/Cochineal ) it’s far removed from the bugs it came from.

By: Kevin Pierce

Kevin Pierce — Thu, 10 Nov 2011 16:34:00 +0000

It was in the book ”Fast Food Nation” that McDonald’s was described as being primarily a REAL ESTATE corporation, “the nation’s largest proprietor of commercial real estate.”, as the corporation owns most of the land that their restaurants sit upon.

http://www.upxsuccess.com/fast_food_nation_summary.html

Combined with the commodities brokerage point of view of this article we can see the true “what sells where” nature of any successful business.

By: Stephen Linhart

Stephen Linhart — Thu, 10 Nov 2011 16:32:00 +0000

This is two stories. And one of them is odd. Story #1: the McRib is a strange molded product. Story #2: McDonalds is more likely to serve pork when they can get it cheaply. Story #2 is not really surprising or sinister. And it doesn’t make McDonalds anything other than a restaurant chain.

By: Rayonic

Rayonic — Thu, 10 Nov 2011 16:18:00 +0000

Not to be a spoilsport, but I think calories are of nutritional value.

By: Zach Peterson

Zach Peterson — Thu, 10 Nov 2011 15:42:00 +0000

Gold4Ribz

By: Rider

Rider — Thu, 10 Nov 2011 15:35:00 +0000

What’s with all the McRib stories this year. Seems every other day I see a new story about the history and economics of the McRib.

By: Richard Lack

Richard Lack — Thu, 10 Nov 2011 15:32:00 +0000

The sentence starting with “I once proposed a line of perverse vegan aerosol meat substitutes…” is the most epic run-on sentence ever. Like Daniel Defoe, only way more fun and with organ meat.