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It is never a good thing when execs from a multibillion-dollar consumer name start getting into arguments on the internet. Even if they’re right.
McDonald’s found itself in the spotlight this week as a casualty of its own prices when news of a (real) $18 Big Mac meal sent social media into overdrive, the high price for a reputed low-cost fast food chain blowing minds.
And true to form, fact-free “information” about inflation stoked the flames. Even the House Republicans’ X account got in on it, joining the growing chorus claiming Big Mac prices have doubled since the pandemic.
With inflation throwing so many prices in flux, it seems nobody knows how much anything costs anymore.
The Big Mac moment precipitated a swift expeditionary force of corrective “actuallys” from financial commentators and the company itself.
“Actually,” Big Mac prices are up 21% on average since 2019, less than inflation’s 23% and food inflation’s 28%. And wages for nonsupervisory workers are up 28%, Nobel-winning economist Paul Krugman pointed out, suggesting that, in real wage terms, shelling out for a burger hurts less.
Our Chart of the Week shows it all — the real data.
But the most important “actually” came from the chain’s US president, Joe Erlinger.
“It frustrates and worries me, and many of our franchisees, when I hear about an $18 Big Mac meal being sold — even if it was at one location in the US out of more than 13,700,” Erlinger wrote in an open letter.
“More worrying, though, is when people believe that this is the rule and not the exception, or when folks start to suggest that the prices of a Big Mac have risen 100% since 2019,” the executive added, noting the company “must remain laser-focused on value and affordability.”
To investors, the appearance of the letter itself may have a whiff of desperation and defensiveness. And this after the company’s results last month disappointed investors as its customers spent and visited less.
A look at its stock chart shows why.
The stock is only up 28% over the past five years, merely in line with many of its customers’ raises. It’s a paltry gain next to the S&P 500’s 90% return, which we left off the chart as it’d change the chart’s scale by nearly an order of magnitude.
The $18 Big Mac tweet showing a view count approaching half a million may also be another example of the Streisand effect, drawing copious attention to a literal nothingburger.
But Erlinger is clearly worried that the company’s current situation is delicate, and social media chatter about McDonald’s not being affordable sprung its team into action.
With its jingles, Dollar Menu, Value Meals, clown, and Billions Served, McDonald’s has always been a marketing company as much as a burger chain.
And despite this odd open letter on the investor relations page, it’s hard not to imagine the company will get the message out to its actual customers. We’ll see in a quarter’s time if it makes a difference.
Ethan Wolff-Mann is a Senior Editor at Yahoo Finance, running newsletters. Follow him on Twitter @ewolffmann.
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Source: finance.yahoo.com