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Author Topic: A Conspiracy of Hogs: The McRib as Arbitrage  (Read 1331 times)

glynor

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A Conspiracy of Hogs: The McRib as Arbitrage
« on: November 21, 2011, 11:27:08 pm »

Check out this awesome post from Willy Staley for The Awl about McDonalds, the McRib, and Pork Futures (via @gruber).  Yes, it is about the McRib sandwich.  Amazing and enlightening about a very odd and unexpected topic.

Quote
The theory that the McRib’s elusiveness is a direct result of the vagaries of the cash price for hog meat in the States is simple: in this thinking, the product is only introduced when pork prices are low enough to ensure McDonald’s can turn a profit on the product. The theory is especially convincing given the McRib's status as the only non-breakfast fast food pork item: why wouldn't there be a pork sandwich in every chain, if it were profitable?

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.

The whole thing is a very worthy read.
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rjm

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Re: A Conspiracy of Hogs: The McRib as Arbitrage
« Reply #1 on: November 22, 2011, 11:45:53 am »

Very interesting article. Might also look for a correlation between price of oil and McRib consumption.

Fossil energy is required to produce the quantity of food we now enjoy (about 10 calories oil for 1 calory food). Therefore food prices track oil prices. Also, as energy costs increase, more income goes to gas, less income is left for everything else including more expensive food, and incomes drop as companies become less profitable due to high energy costs and falling demand.
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KingSparta

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Re: A Conspiracy of Hogs: The McRib as Arbitrage
« Reply #2 on: December 01, 2011, 05:51:28 pm »

McRib, Is there really any pork in it?

I think it is all Grissel save up all year from scraps from pork producers.

Ever notice they only have it at certain times of the year.
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