I’m not convinced the cost of everything else justifies the annihilation of the Dollar Menu.
McDonalds adopted the same strategy that bankrupted Sears over a decade ago. Rather than running it as a single business, they’ve got the corporate offices divided up into “sectors” that are rivalrous to one another. So they have a real estate division that controls the actual property that the restaurants sit on, and then they’ve got an agricultural department that manages where and how they source raw materials (including farmland which they own and manage and holy shit the labor practices there are a whole different kind of nightmare), and then they’ve actually got the retail storefronts.
Each division is expected to turn a profit by charging competitive market rates. So if you have a McDs franchise license as a retail venue, but you don’t actually own the building, your rent jumps up at the same rate as all the other units around you. If there’s a bad crop of potatoes or a sudden glut of pork, you adjust your menu accordingly.
In fact, there’s a dirty secret in the agricultural industry called the McRib Arbitrage which describes a soft price floor for hog futures based on the assumption that once prices dip below a certain point, McDonalds will start buying pork in bulk and clear the surplus to make their iconic sandwiches.
All this is to say “The Dollar Menu” has absolutely nothing to do with wage rates and everything to do with real estate and agricultural costs, combined with the clearing price for a hamburger at neighboring fast food restaurants. If nobody else is offering $1 burgers, McDonalds will make it cost-prohibitive for any of their franchises to do it, too.
McDonalds adopted the same strategy that bankrupted Sears over a decade ago. Rather than running it as a single business, they’ve got the corporate offices divided up into “sectors” that are rivalrous to one another. So they have a real estate division that controls the actual property that the restaurants sit on, and then they’ve got an agricultural department that manages where and how they source raw materials (including farmland which they own and manage and holy shit the labor practices there are a whole different kind of nightmare), and then they’ve actually got the retail storefronts.
Each division is expected to turn a profit by charging competitive market rates. So if you have a McDs franchise license as a retail venue, but you don’t actually own the building, your rent jumps up at the same rate as all the other units around you. If there’s a bad crop of potatoes or a sudden glut of pork, you adjust your menu accordingly.
In fact, there’s a dirty secret in the agricultural industry called the McRib Arbitrage which describes a soft price floor for hog futures based on the assumption that once prices dip below a certain point, McDonalds will start buying pork in bulk and clear the surplus to make their iconic sandwiches.
All this is to say “The Dollar Menu” has absolutely nothing to do with wage rates and everything to do with real estate and agricultural costs, combined with the clearing price for a hamburger at neighboring fast food restaurants. If nobody else is offering $1 burgers, McDonalds will make it cost-prohibitive for any of their franchises to do it, too.