Tuesday, November 8th, 2011

A Conspiracy of Hogs: The McRib as Arbitrage

One of McDonald’s most divisive products, the McRib, made its return last week. For three decades, the sandwich has come in and out of existence, popping up in certain regional markets for short promotions, then retreating underground to its porky lair—only to be revived once again for reasons never made entirely clear. Each time it rolls out nationwide, people must again consider this strange and elusive product, whose unique form sets it deep in the Uncanny Valley—and exactly why its existence is so fleeting.

The McRib was introduced in 1982—1981 according to some sources—and was created by McDonald’s former executive chef Rene Arend, the same man who invented the Chicken McNugget. Reconstituted, vaguely anatomically-shaped meat was something of a specialty for Arend, it seems. And though the sandwich is made of pork shoulder and/or reconstituted pork offal slurry, it is pressed into patties that only sort of resemble a seven-year-old’s rendering of what he had at Tony Roma’s with his granny last weekend.

These patties sit in warm tubs of barbecue sauce before an order comes up on those little screens that look nearly impossible to read, at which point it is placed on a six-inch sesame seed roll and topped with pickle chips and inexpertly chopped white onion. In addition to being the outfit's only long-running seasonal special and the only pork-centric non-breakfast item at maybe any American fast food chain, the McRib is also McDonald’s only oblong offering, which is curious, too—McDonald’s can make food into whatever shape it wants: squares, nuggets, flurries! Why bother creating the need for a new kind of bun?

The physical attributes of the sandwich only add to the visceral revulsion some have to the product—the same product that others will drive hundreds of miles to savor. But many people, myself included, believe that all these things—the actual presumably entirely organic matter that goes into making the McRib—are somewhat secondary to the McRib’s existence. This is where we enter the land of conjectures, conspiracy theories and dark, ribby murmurings. The McRib's unique aspects and impermanence, many of us believe, make it seem a likely candidate for being a sort of arbitrage strategy on McDonald's part. Calling a fast food sandwich an arbitrage strategy is perhaps a bit of a reach—but consider how massive the chain's market influence is, and it becomes a bit more reasonable.

Arbitrage is a risk-free way of making money by exploiting the difference between the price of a given good on two different markets—it’s the proverbial free lunch you were told doesn’t exist. In this equation, the undervalued good in question is hog meat, and McDonald’s exploits the value differential between pork’s cash price on the commodities market and in the Quick-Service Restaurant market. If you ignore the fact that this is, by definition, not arbitrage because the McRib is a value-added product, and that there is risk all over the place, this can lead to some interesting conclusions. (If you don’t want to do something so reckless, then stop here.)

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 McRib was, at least in part, born out of the brute force that McDonald’s is capable of exerting on commodities markets. According to this history of the sandwich, Chef Arend created the McRib because McDonald’s simply could not find enough chickens to turn into the McNuggets for which their franchises were clamoring. Chef Arend invented something so popular that his employer could not even find the raw materials to produce it, because it was so popular. “There wasn’t a system to supply enough chicken,” he told Maxim. Well, Chef Arend had recently been to the Carolinas, and was so inspired by the pulled pork barbecue in the Low Country that he decided to create a pork sandwich for McDonald’s to placate the frustrated franchisees.

But the McRib might not have existed were it not for McDonald’s stunning efficiency at turning animals into products you want to buy.

As McDonald's grows, its demand for commodities also grows ever more voracious. Last year, Time profiled McDonald’s current head chef, Daniel Coudreaut (I know what you’re thinking: two Frenchmen have been Executive Chef at McDonald’s? But no, Chef Coudreaut is American, while Chef Arend is a Luxembourger), whose crowning achievement so far has been turning a Big Mac into a burrito. In his test kitchen, we learn, a sign hangs that reads “It’s Not Real Until It’s Real in the Restaurants,” reminding chefs and cooks that their creations, no matter how tasty and portable they may be, must be scalable—above all else.

When the Time reporter visited the kitchen, Chef Coudreaut was cooking a dish that involved celery root—a fresh-tasting root that chefs love for making purees in the fall and winter. Chef Coudreaut proves to be quite a talented cook, but Time notes that “there is literally not enough celery root grown in the world for it to survive on the menu at McDonald’s—although the company could change that since its menu decisions quickly become global agricultural concerns.”

(Want to make enemies quickly? Tell this to the woman at the farmer’s market admiring the rainbow chard. Then remind her to blanch the stems a few minutes longer than the leaves—they’re quite tough!)

Now, take a look at this sloppy chart I’ve taken the liberty of making. The blue line is the price of hogs in America over the last decade, and the black lines represent approximate times when McDonald’s has reintroduced the McRib, nationwide or taken it on an almost-nationwide “Farewell Tour” (McD’s has been promising to get rid of the product for years now).

Key: 1. November 2005 Farewell Tour; 2. November 2006 Farewell Tour II; 3. Late October 2007 Farewell Tour III; 4. October 2008 Reintroduction; 5. November 2010 Reintroduction.

The chart does not include pork prices leading into the current reintroduction of the McRib, but it does show it on a steep downward trend from August to September. Prices for October, 2011 hogs have not been posted yet, but I suspect they will go lower than September—pork prices tend to peak in August, and decline through November. McDonalds, at least in recent years, has only introduced the sandwich right during this fall price decline (indeed, there is even a phenomenon called the Pork Cycle, which economists have used to explain the regular dips in the price of livestock, especially pigs. In fact, in a 1991 paper on the topic by Jean-Paul Chavas and Matthew Holt, the economists fret that “if a predictable price cycle exists, then producers responding in a countercyclical fashion could earn larger than ‘normal’ profits over time… because predictable price movements would… influence production decisions.” At the same time, they note that this behavior would eventually stabilize the price, wiping out the pork cycle in the process).

Looking further back into pork price history, we can see some interesting trends that corroborate with some McRib history. When McDonald’s first introduced the product, they kept it nationwide until 1985, citing poor sales numbers as the reason for removing it from the menu. Between 1982 and 1985 pork prices were significantly lower than prices in 1981 and 1986, when pork would reach highs of $17 per pound; during the product’s first run, pork prices were fluctuating between roughly $9 and $13 per pound—until they spiked around when McDonald’s got rid of it. Take a look at 30 years of pork prices here and see for yourself. Also note that sharp dip in 1994—McDonald’s reintroduced the sandwich that year, too. Though notably, they didn’t do so in 1998.

(I’m sure all the sharp little David Humes among us are now chomping at the bit—and you’re right to do so! This proves nothing. It is just correlation—and the sandwich doesn’t always appear when pork prices are low. In fact, the recent data could prove that McDonald’s actually drives pork prices artificially high in the summers before introducing the sandwich—look at 2009’s flat summer prices. Could that be, in part, because there was no McRib? On the other hand, food prices were flat across the board in 2009 so probably not. So, no, this correlation proves nothing, but it is noteworthy.)

Because we don’t know the buying patterns—some sources say McDonald's likely locked in their pork purchases in advance, while others say that McRib announcements can move lean hog futures up in price, which would suggest that buying continues for some time—and we can’t seem to agree on what the McRib is made of—some sources say pork shoulder, others say a slurry of offal—it’s hard to really make any real conclusions here.

The one thing we can say, knowing what we know about the scale of the business, is that McDonald’s would be wise to only introduce the sandwich (MSRP: $2.99) when the pork climate is favorable. With McDonald’s buying millions of pounds of the stuff, a 20 cent dip in the per pound price could make all the difference in the world. McDonald’s has to keep the price of the McRib somewhat constant because it is a product, not a sandwich, and McDonald’s is a supply chain, not a chain of restaurants. Unlike a normal restaurant (or even a small chain), which has flexibility with pricing and can respond to upticks in the price of commodities by passing these costs down to the consumer, McDonald’s has to offer the same exact product for roughly the same price all over the nation: their products must be both standardized and cheap.

Back in 2002, McDonald's was buying 1 billion pounds of beef a year. (As of last year, they were buying 800 million pounds for the U.S. alone.) A billion pounds of beef a year is 83.3 million pounds a month. If the price of beef is abnormally high or low by 10 cents a pound, that represents an $8.3 million swing (which McDonald’s likely hedges with futures contracts on something like beef, which they need year-round, so they can lock in a price, but this secondary market is subject to fluctuations too).

At this volume, and with the impermanence of the sandwich, it only makes sense for McDonald’s to treat the sandwich as a sort of arbitrage strategy: at both ends of the product pipeline, you have a good being traded at such large volume that we might as well forget that one end of the pipeline is hogs and corn and the other end is a sandwich. McDonald’s likely doesn’t think in these terms, and neither should you.

But when dealing with conspiracy theories, especially ones you aren’t quite qualified to prove, one must always consider other possibilities, if only to allow them to reinforce your nutty beliefs.

Counter Theory 1: An obvious reason that the McRib might be a fall-only product could be that people have barbecue (or at least things slathered in barbecue sauce) all the time over the summer—they would be less likely to settle for a cheap and intentionally grotesque substitute when they can have the real thing. Introduce it in the fall and you might catch that associative longing for the summer that HFCS-laden spicy sauces and rib-shaped things evoke.

To this I say: but what about winter?

Counter Theory 2: Another counter-theory comes from an online forum, where all good and totally reliable information comes from on the Internet. Here, an alleged graduate from Hamburger University claims that the McRib’s impermanence has nothing to do with pork prices, but rather that it’s a loss leader for McDonald’s—the excitement of a limited-time-only product gets people in the door, as we have noted, and they’ll probably buy the big drinks and fries with the Monopoly pieces on them because they’re, on average, impulsive and easy to fool.

To this I say: I knew that sandwich was a low margin product! All the more reason for McDonald’s to time it properly with price swings.

Counter Theory 3: The last, and most obvious, explanation is the official version of the story: the sandwich has a cult following, but it’s not that popular. Like "Star Trek," "Arrested Development" and that show about Jesus Christ returning to San Diego as a surfer, the McRib was short-lived because not enough people were interested in it, even though a small and vocal minority loved it dearly. And unlike these TV shows, which involve real actors and writers with careers to tend to, the McRib needs only hogs, pickles, onions and a vocal enough minority who demand the sandwich’s return, and will even promote it for free with websites, tweets and word-of-sauce-stained-mouth.

We’re marks, novelty-seeking marks, and McDonald’s knows it. Every conspiracy theorist only helps their bottom line. They know the sandwich’s elusiveness makes it interesting in a way that the rest of the fast food industry simply isn’t. It inspires brand engagement, even by those who do everything they can to not engage with the brand. I’m likely playing a part in a flowchart on a PowerPoint slide on McDonald’s Chief Digital Officer’s hard drive.

Ultimately what the McRib says about us as a society is perhaps worse than any conspiracy theory about pork prices. The McRib, born at the end of the Volcker Recession, a child of Reagan’s Morning in America, has been with us on and off over the last three decades of underregulated corporate growth, erosion of organized labor, the shift to an “ideas” economy and skyrocketing obesity rates. The McRib is made of all these things, too. When you think back to its humble origins, as both an homage to Carolina style pork barbecue, and as a way to satisfy McNugget-hungry franchises, it’s all there.

Barbecue, while not an American invention, holds a special place in American culinary tradition. Each barbecue region has its own style, its own cuts of meat, sauces, techniques, all of which achieve the same goal: turning tough, chewy cuts of meat into falling-off-the-bone tender, spicy and delicious meat, completely transformed by indirect heat and smoke. It’s hard work, too. Smoking a pork shoulder, for instance, requires two hours of smoking per pound—you can spend damn near 24 hours making the Carolina style pulled pork that the McRib almost sort of imitates.

And for its part, the McRib makes a mockery of this whole terribly labor-intensive system of barbecue, turning it into a capital-intensive one. The patty is assembled by machinery probably babysat by some lone sadsack, and it is shipped to distribution centers by black-beauty-addicted truckers, to be shipped again to franchises by different truckers, to be assembled at the point of sale by someone who McDonald’s corporate hopes can soon be replaced by a robot, and paid for using some form of electronic payment that will eventually render the cashier obsolete.

There is no skilled labor involved anywhere along the McRib’s Dickensian journey from hog to tray, and certainly no regional variety, except for the binary sort—Yes, the McRib is available/No, it is not—that McDonald’s uses to promote the product. And while it hasn’t replaced barbecue, it does make a mockery of it.

The fake rib bones, those porky railroad ties that give the McRib its name, are a big middle finger to American labor and ingenuity—and worse, they’re the logical result of all that hard work. They don’t need a pitmaster to make the meat tender, and they don’t need bones for the meat to fall off—they can make their tender meat slurry into the bones they didn’t need in the first place.

And unlike a Low Country barbecue shack, McDonalds has the means to circumvent—or disregard—supply and demand problems. Indeed, they behave much more like a risk-averse day trader, waiting to see a spread between an Exchange Traded Fund and its underlying assets—waiting for the ticker to offer up a quick risk-free dollar.

Witness to all this, Americans on both coasts tweet jokes about the sandwich, and reference that one episode of "The Simpsons," and trade horror stories, or play the contrarian card and claim to love it; and meanwhile, somewhere in Ohio, a 45-year-old laid-off factory worker drops a $5 bill on the counter at his local McDonald’s and asks a young person wearing a clip-on tie for the McRib meal, "to stay." The McRib is available nationwide until November 14th.

Willy Staley also has a Tumblr.

Photo by "theimpulsivebuy."

96 Comments / Post A Comment

Hammer (#13,641)

Wow. Thank you.

Finally. You guys have been sitting on this article, like, a year or something.

stuffisthings (#1,352)

@Bus Driver Stu Benedict The Awl only releases McRib articles when the price of content is low.

deepomega (#1,720)

But I know people – respectable people! People I trust! – who fucking love the McRib. They swear by it. It makes me worry that I'm actually missing the part of my tongue that is sensitive to pork slurry.

carolina bbq? other than the pork, mcribs have nothing in common with carolina bbq… i'm not talking quality or anything, carolina bbq has a thin vinegar/pepper sauce (with most of SC having a mustard-based sauce). the mcrib's roots are in midwestern bbq.

skyslang (#11,283)

@Paul William Drew@facebook You speak of SOUTH Carolina BBQ. McRib is closer to NORTH Carolina BBQ.

@Paul William Drew@facebook no, i speak of North Carolina (with mention of the mustard variant appearing in a large part of SC). In my experience, it can get a bit tomatoey in the western part of NC – though still with the vinegar base, they just throw in a bit of ketchup with it – but most everywhere i've ever been from 77 eastward is vinegar/pepper, no tomato.

SeanP (#4,058)

@Paul William Drew@facebook I'm with you on this one – McRib sauce is NOTHING like NC BBQ.

Ben Grant@facebook (#183,078)

@skyslang No, I have lived in north carolina and north carolina barbecue is vinegar based, always. As for barbecue seen on mcrib it's closer to traditional masterpiece BBQ sauce from a bottle. Nothing like NC or SC barbecue, which is again vinegar based.

Wow, great article.

I am convinced. One minor correction. In Ohio we order our McRibs "for here" not "to stay."

zoom (#10,138)

I just read a long article about the effect of the McRib on pork futures.

Smitros (#5,315)

Brilliant. Damn.

Sabin Hinton (#8,850)

The most revelatory and unexpected fact of this article? That the McRib is actually meat.

SeanP (#4,058)

@Sabin Hinton It's not actually meat, it's… "meat".

boysplz (#9,812)

I love getting the chance to look into just how mind-bogglingly big McDonald's is. I work project management and last year was planning installs at McDonald's so I got the chance to get a peek into their inner workings and it was kind of freaky.

The point that McDonald's is not just a chain of restaurants can't be understated. Everything they do is very well thought out, from being one of the first fast food chains to offer free wi-fi to that whole new "healthy" food kick they're on. I'd be really impressed if I weren't so freaked by just how much social control that these corporations lever just by deciding whether or not to make something accessible to the consumers.

dntsqzthchrmn (#2,893)

Hi. It's election day.

Nick Douglas (#7,095)

@dntsqzthchrmn And if there were a single contested election in New York City, maybe they'd write about it.

hman (#53)


Abe Sauer (#148)

I was gonna' say "What about China's massive recent imports of pork, of which the US is the #1 supplier?" But then I was all, "There is no skilled labor involved anywhere along the McRib’s Dickensian journey from hog to tray?" and "sadsacks?" and "Ohio?" and then I was all: Wow, this is the essay equivalent of the McRib, which is kind of delicious, in a garbage meta-marketed to the easy to fool those on both coasts kind of way.

pl581 (#174,956)

@Abe Sauer
What are you trying to say here?

roboloki (#1,724)

i would also like to dissoociate the wonderful bbq in the carolinas from this corn syrup/pork offal porcine centipede. come to the lowcountry and have a plate of bbq that has been lovingly prepared and compare that with a mcrib (the latter should be a mental exercise as i would never encourage one of you to eat a mcrib). you will dig up the body of ray kroc just so you can shit in his mouth.

Abe Sauer (#148)

@roboloki I get the frustration, and have no particular love for the McRib, but how many out there who enjoy the mcrib really think it's the same as BBQ? Is the McRib really damaging the reputation of ribs any more than, say, the fleshlight is damaging the reputation of vaginas?

@Abe Sauer it's the flavor, though… in Iowa BBQ pork actually tastes pretty much like a McRib, sauce-wise (setting aside the dubiousness of the meat product) while in the Carolinas it does not, unless you're at an Applebee's or somesuch.

deepomega (#1,720)

@Abe Sauer: Jesus, man, way to ruin fleshlights.

zidaane (#373)

@Paul William Drew@facebook The McRib is no match for the Gardenburger Riblet.

dokuchan (#540)

@zidaane Don't get me started on the Riblet…LUV U VEGGIE SLURRY, BOILED INNA PLASTIC BAG.

HiredGoons (#603)

What about the theory that they introduce it around exceptionally bad flu seasons to give us all extra hormones and antibiotics?

JGP (#1,686)

@HiredGoons I hadn't thought of this, but now I'm going to make myself eat 3 for lunch.

seentwagg (#8,810)


sharilyn (#4,599)

By far the most eloquent thing I've ever read about McDonald's sandwiches.

I look at the McRib sort of the way I look at Burning Man: at this point, it's a badge of honor not to have participated in either one, so no need to start now.

HiredGoons (#603)

@Clarence Rosario: can we hang out?

turd_sandwich (#5,660)

@Clarence Rosario I put tattoos in the same category.

@turd_sandwich I DQ'd myself from that one in the 80s.

@HiredGoons We did! At Burning Man!

Patrick M (#404)

We should consider a new zodiac based on the periodic appearance of QSR products, like, "I'm a McRib with Shamrock Shake Rising."

This theory rests upon the assumption that McDonald's has the McRibs manufactured for them immediately prior to roll out, whereas they could have them produced, frozen and warehoused whenever pork prices dip whether that's in August or April. I could confirm this by talking to my dad, who used to work for McDonald's biggest supplier of McRibs but that would require too much work for a mere blog comment…

emberglance (#7,305)

@Benjamin Lipsman@twitter That sounds kinda expensive to buy, freeze and warehouse pork, doesn't it? The whole point of this article is that prices are being kept to the very barest minimum at every stage of the process.

HiredGoons (#603)

'HOG FUTURES' needs to be a a tag utilized more frequently moving forward.

City_Dater (#2,500)

My god, that photo looks like a crime scene. On a bun. With pickles.

I'm never eating anything, again, ever.

melis (#1,854)

@City_Dater To be honest, I'd probably still eat those pickles.

abbyh (#174,613)

@City_Dater I read your comment and I was all like, "preach!" Then I read @melis 's comment, and I was all like, "real talk!"

Antennapedia (#161,290)

Wait, didn't Robert C. Baker invent the chicken nugget as a food scientist at Cornell? There's a hall named after him and a elegiac nerd pop song about him and everything. http://www.paulandstorm.com/lyrics/nugget-man/

Symphony Sid (#174,639)

Is it arbitrage if a played out gold mine shuttered for 50 years is reopened after the price of gold triples?

No. It wasn't profitable to mine there at the lower price, but it is now. That's not arbitrage, that's just taking advantage of a new price. Same in reverse for the McRib.

I got bored about halfway through. I don't think I really care why they exist or why they come and go. I only know I have a toally artificial Pavlovian reaction to them triggered by the advertisements. The ads run. I go out. I buy them. I eat them and I feel gloriously pedestian and giddily guiltless.

melis (#1,854)

I'm not sure lacking the attention span to read a 3000-word article in its entirety is something I'd choose to boast about, but there one is.

@Clarke Barry@twitter Well, Melis, WE became fatigued at your seventh well chosen and totally appropriate word. WE resolved another McRib would be the best solution… (Urp.)

Alecks (#174,650)

Star Trek, in its various incarnations was on television for longer than 25 years. I find it hard to believe that a small but vocal minority could keep iterations of a product on air for that long.

goodiesfirst (#3,448)

I recently discovered that Germany is the only country with a McRib on the menu year-round. I'm not sure how to interpret that bit of information in relation to any conspiracy theories.

melis (#1,854)

German McRibs are made out of other country's old McRibs

@goodiesfirst Probably because McSchwein just sounds so damn tasty.

goodiesfirst (#3,448)

@DorothyMantooth I'm totally going to get one when I'm there later this month, if only to gauge whether eating a McRib in Berlin makes one cooler (loosely defined) than than doing so in Brooklyn.

@goodiesfirst That's where I ate my only McRib. It took me ten years to feel comfortable eating even barbecue-flavored potato chips. Glazing meatloaf with ketchup still makes me flinch. Be careful.

rdl1981 (#10,465)

In Italy, there was a pork sandwich called the McPink on the menu (at least in 2002) but sadly it was "on vacation"

I had a McRib in Berlin once and it tasted exactly like if I had eaten an American McRib, provided I was the third person in a human centipede.

eansel@twitter (#174,668)

Extra credit for "word-of-sauce-stained-mouth."

pidge (#174,678)

Amazing article. Small nit-pick- commodity pork prices in the graph cited run between $.90 and $1.30, not $9- $13.

EggsErroneous (#10,609)

Marry me Willy marry me now.

barnhouse (#1,326)

Check out this photo in the lower right!!! It is a Belgian sausage shape.

stuffisthings (#1,352)

Regressions or it didn't happen.

"Prices for October, 2011 hogs have not been posted yet"

eh… just look at the cme.. http://www.cmegroup.com/trading/agricultural/livestock/lean-hogs_quotes_settlements_futures.html

Nick Douglas (#7,095)

Given that McDonald's openly acknowledges the role of commodity prices in its own pricing, I assume you're using "conspiracy" in only the most facetious possible way, and that they would possibly even admit to arbitrage in a trade mag if asked.


Andrew Piccone (#7,185)

Good read. Thanks for writing! I had a McRib last fall when they brought it back briefly, and I was pretty hungover when I ate it and it was delicious.

Nathan Ng@twitter (#175,332)

Six minutes into this CBC interview, the John Betts, CEO of McDonald's Canada is asked "How come the McRib doesn't get full roster status?"

His answer is interesting — if a touch evasive — in the context of this post… "It's like a cult… you'll be seeing it again."


[the Lang and O'Leary Exchange is a business news program produced by Canada's national broadcaster. The rest of the video is also interesting for those of you who might want to understand the strategy behind their 'premium' coffee...]

John Weiss (#175,379)

What a fine article! I've no intention of ever setting a foot in a McDonald's; this article strengthens my conviction.

Coldon (#175,577)

Interesting article. I enjoy eating them once in a while, but from now on I'm afraid I'll
be thinking of the word "slurry" as I bite into "it".

Jerh (#175,599)

I've always felt the McRib was a bit of a big Mcsteak. I got to eat a shrimp burger from McDonalds at Narita Airport… never understood why they held out on that menu item in CA.

Dan@twitter (#175,706)

While commodity pricing is certainly a factor, the main limiting factor for the McRib is the same challenge that led to its introduction. Just like the McNugget before it, the McRib is too popular. There is not enough supply of pork trim in the world to press into enough McRibs to carry them year round.

soco (#8,225)

Is it shocking to anyone that a company would release a marginally popular product only when it's profitable to do so?

Brian P.@twitter (#175,802)

This is the greatest article I have ever read about anything ever.

Uncle Luke (#175,910)

Chompiracy Theory?

profesora (#175,946)

Fabulous article. But when you say "slurry" and "offal", you don't mean, well, "offal" as in pig droppings, do you? I want to think that you mean "offal" as in chopped-up byproducts from the meat shaping process…

Willy, my Theory: that it is the spread between the price in live cattle and lean hogs (not seasonality, or simply price of hogs) that influenced McRib Timing. You briefly mention beef price, but dont get into it.


Also: when you get historical, you should consider the real price of lean hogs instead of the nominal price for profitability.

Antryg Windrose (#176,134)

Three bucks a sandwich?!?!? That's beyond our budget. For that much at Burger Thing (it's a thing like a burger) we get two Whopper Jrs and two cups of cold filtered water. And the BK burger meat tastes better than McD's offal. How can anyone with functioning taste buds eat that stuff? Sure, McD's is better than eating raw banana slugs with whipped cream — but not much. I am perplexed.

Those are really interesting theories, but I guess they only apply to the US. In Germany the McRib is available all year round, so that renders those theories moot, at least in Germany :)

@Tobias Joehle@twitter Actually, that Germany carries it year round just enforces the Theory that the McRib has a cult like following in the US and other parts of the world, and brings out the McRib in limited quantity to sedate those followers.

After a couple weeks the McRib drops off drastically in sales. I worked at McD's for over 10 years, and remember when the McRib would roll out and was a huge hit. Then in a short matter of time, we wouldn't even sell 10 in a day (in a store with over 1000 customers a day.. that's pretty bad). There is no incentive to keep it in store year round.

CS (#176,423)

When is the fast food industry going to dump analogue attempts and just market "STUFF?" Flavored nutrients that don't ape existing foods that are marketed as hot-stuff, cold-stuff, sweet-stuff, breakfast-stuff, lunch-stuff… you get the idea. Drop the pretense and just let this "stuff" be what it is… food stuff…

Robert Coates (#176,594)

I enjoyed the article because of your humorous choice of words. You may have something that they only have the sandwich when the price of pork is low, and they can hopefully make a profit on it. However, it looks more like it just comes out about every year around October-November.

monkeyajb (#524)

this is causing me to reconsider…

John Maliga@twitter (#177,238)

You've WAY over-thought this. This is marketing 101 – create a false scarcity, or a one-time deal. McDonald's does it, Trader Joe's does it, and so does everyone else in between. Your blog posts are an outcome expected by McDonald's PR flacks, as are the countless multiple media references to the same. That you don't know why, and that you must attempt to explain it, is the marketing genius behind McRibs (and most of what you consider your free will to choose what you will consume, including politics). They get you into the store and, satisfied or not, you will buy SOMETHING. It hardly matters what, because the average sale is what's important, not the profit on pork or beef. If they can increase both the number of sales and the average purchase, they've created a success.

You can know this, and not like it, and still purchase a product that increases their bottom-line.

Greg Dewar (#5,128)

McDonalds makes many pork products both in the USA and elsewhere. the have been making sausage mc muffins everywhere, and even make a pork patty big mac in some countries and so on.

personally I like the vegetarian version at the store better than the mc rib, which is too messy to eat, and always makes you feel like you just ate way too much hog anus and hooves and you feel like crap the rest of the day. if they had the plain real ground pork patty burger here topped with bbq sauce I'd buy that instead of this thing.

Steve Lang@facebook (#178,676)

I'm not a McRib fan or anything, but calling it a 'market arbitrage strategy' makes it sound more insidious than it really is- 'buy low, sell high'. I thought this was going to be some article about how McDonald's is trying to exert control over the Chicago Mercantile Exchange or something like that. But…yeah the basic idea does make sense- they re-introduce it when pork prices are lower.

OTOH with their scale if they wanted to sell the McRib for long durations couldn't they simply lock in a bunch of futures contracts when prices were favorable? I think it's more likely that this is simply a specialty niche product that makes money over the short term but is not quite viable as a permanent menu item.

MikeBarthel (#1,884)

Technically the McRib is a torchon, isn't it?

rufferto (#182,250)

First I remember seeing a promotional video by McDonald's about the manufacturing of the McRib when it was originally introduced. In that video there was a sausage maker who was absolutely thrilled to be making a sausage with such high quality slurry rather than what is usually used in pork sausage. I don't know if the McRib is still made as a pork sausage but that is essentially how it started.

Second I had a friend who worked at the Chicago Board of Trade who correctly predicted the first return of the McRib when he observed that the floor trader for McDonald's was buying up cheap pork contracts. This seems to support the premise of the article.

mansky (#182,296)

Seems you're missing the point – McDonald's says nothing about WHY because it creates a mystique around the product, and it's available for only a short time each year. Marketing 101 – get people to talk about WHY which simply creates demand (maybe not demand from you, but from a significant paying percentage of your readers). The vagaries of the marketplace such as the variations in pork prices (did you do a similar chart for beef, or for chicken thigh meat in McNuggets?) are usually fudged in corporate accounting, and the actual price of source material doesn't directly affect the selling price unless there is a significant difference.

That we're all talking about this is the point. We're creating a demand for a mediocre and savory product that is a bit different than the expected offerings. Some of us will bite. If only 2% (or pick a single-digit percentage) of us buy the product, that increases sales by at least 2% (and, because the product is a "premium" product, it probably increases the per-sale average significantly more than that). Pork prices are almost irrelevant, in most cases. It's merely about average sales, and number of sales.

You say: The McRib [..] has been with us on and off over the last three decades of underregulated corporate growth, erosion of organized labor, the shift to an “ideas” economy and skyrocketing obesity rates.

Wow, a bit of a liberal slant there? How about increasingly overregulated *everything* and the continuance of the union cartels strangling growth? Letting the market control the prices for goods, services, and salaries might have kept us from the increasing economic catastrophe of the last few decades. Put simply, the government, and organized coercion by labor groups don't know how to properly allocate resources, and they never will. Only things like supply and demand and the customer voting with their dollars can sensibly decide how to allocate resources.

Kevin@twitter (#182,371)

McDonald's Japan actually sells a pork-based burger during their regular menu hours: the McPork Sandwich. It's actually pretty tasty. http://www.brandeating.com/2010/02/mcpork-sandwich.html

@Kevin@twitter Thailand's McDs have long offered a Samurai Pork Burger http://www.mcthai.co.th/menuall_content_en.php?catid=2

Hey Willy, this article turned up in a friend's FB feed and I immediately latched onto it and saved it for both my IBDP Economics and Business Management classes. It's great! Know that you have written a piece of work that will educate high school students at international schools (currently in Hanoi at the UN International School, but I've worked at several others) for years to come!

@Jackson Garland@facebook And you can get me @jrg_one on Twitter if you want.

Alex Paré@facebook (#251,597)

Yeah but… what is Ham made of then? And bacon? also, isnt Subway's a QSR? they serve Pork Ribs sandwiches ALL YEAR LONG…

highprbl (#272,360)

Excluding small units, prices in the central region fell 0.6 percent month-on-month, while the non-central region saw prices edge down 0.2 percent. 100 west makati condo

JamesC (#280,804)

Excellent article. Very interesting to read. I really love to read such a nice article programe pc gratis. Thanks! keep rocking!

Post a Comment