The Elusive McRib Sandwich

by robekulick

If you’ve turned on your TV in the last month or so, you’re probably aware at this point that McDonald’s has reintroduced its McRib sandwich yet again. The McRib is a little like the Bobby Fisher of the fast food world. It comes out of hiding with a lot of fanfare, has its moment in the sun, and then suddenly disappears as if it never had existed at all. Of course with Bobby Fisher his strange behavior can easily be explained as being the direct result of  his craziness. McDonald’s is a hyper-rational profit-maximizing business, so the question is what’s going on here?

One blog, The Awl, has an interesting answer:

http://www.theawl.com/2011/11/a-conspiracy-of-hogs-the-mcrib-as-arbitrage

The Awl proposes that the McRib is actually a strategy that McDonald’s uses to play the commodities market. This chart reproduced from the Awl shows that the introduction and re-introduction of the McRib appears to correspond to periods when the price of pork is in a state of significant decline. The theory is then that McDonald’s takes advantage of the opportunity to buy pork on the cheap and re-sell it as  the McRib at a higher price.

 

This theory has a lot of appeal.  It makes a lot of sense that consumer valuations of pork products would be far less volatile than pork prices so that in periods of declining pork prices retailers would have an opportunity to increase their profits. And if the McRib was simply a bad idea like the Arch Deluxe there’s no way it would have been re-introduced so often…much less would McDonald’s dump so much money into advertising it every single time it reappears. On the other hand, since one would think that this is a fairly obvious fast-food strategy, why haven’t McDonald’s competitors responded with similar pork based strategies?

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