Friday, November 11, 2011

Your Beloved McRib Is Actually McDonald's Pork-Price Arbitrage Strategy

For some reason, the Internet has exploded this past week about stories about the McRib, which apparently a huge number of people (or at least a huge number of bloggers) really, really like. Hence, I keep seeing stories posted about the McRib.

If so many people love the McRib, why is it only available for limited times, and at seemingly random intervals?

An amazingly in-depth post about the McRib over at The Awl has an interesting theory, with a graph to back it up:
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….
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 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).

You can also head over to The Awl for even more theories, though I find this one to be the most compelling (and definitely the most interesting).

So, yes, it looks like the McRib might be a price arbitrage strategy for McDonald's - when the price of pork falls below some kind of threshold, they buy all of the most horrible parts of the pig that Americans would never eat whole, grind them up, mash them together in the shape of something vaguely resembling ribs, slather it in barbeque sauce, and sell it for fun (and profit).

Therefore, McRib lovers, you might be able to get the McRib to appear more often if you can coordinate your pork purchases to cause wild swings in the price of pork. Anyone up for founding PorkPriceVolatilityForMcRibs.org? I would, but I waste enough time on this blog anyway, and I'm not a McRib fan.

Let me know if you want to try to fix the price of pork in the USA, and I'll be happy to promote your effort on this blog!

4 comments:

  1. Reminds me of when I was working on a project for the pork industry. There were also several large feed lots for cattle close by and I was fascinated / repulsed to learn that because cattle only digest 70% of the grass/hay/grain they are fed their feces is strained, steamed, dried, reprocessed and fed back to them.

    What unholy corner of the bean counting kingdom do these ideas come from?

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  2. Who cares about the prices. McDonald's should just raise the price of the sandwich to keep it on the menu all year long. We will still buy it, because it taste good.
    Also, any part of the pig is edible. Just ask your grandparents who raised their own swine. In the better days without cellphones and Ipods distorting the minds of the young.
    Pork is a wonderful blessing to humans. The taste is awesome. Eat more pork and feel happier, you may not need your meds...Make the McRib a staple! And to those in the humane society, who care more about an animal than they do humans. Why don't you take your energies and time and complain to abortion doctors or maybe even complain about littering which is really a problem in this country. If you really cared, you would join the fight to secure our borders too!

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  3. Whoa, Anonymous, let's calm down a little, shall we?

    McDonald's is, of course, free to sell the McRib whenever and however it chooses - I was simply pointing out the likely reason WHY the McRib seems to come and go as it does. I'm a big fan of pork myself (especially pork loin and pork ribs - mmmmm). I certainly didn't mean for my post to be anti-pork.

    I do indeed use this blog to complain about many things, though I don't think I've complained about littering specifically - maybe sometime in the future. But, you won't find me complaining about abortion doctors, as should be obvious from my previous posts - I don't think I should have any say on what goes on between a woman and her doctor.

    And I'm not sure what to say about securing our borders - as I've said elsewhere on this blog, illegal immigrants probably don't cost this country very much money, and they provide a huge source of cheap labor. On the one hand, I see that you don't want to throw open the borders to absolutely anyone, but on the other hand, it seems impractical, inhumane, and impossibly expensive to deport all the illegal immigrants who are currently here and shut down the borders completely.

    Any suggestions as to what we should do about that particular conundrum? (And how'd we get on this topic from the McRib, anyhow?)

    -The Angry Bureaucrat

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  4. On the other hand, Doug, more comments like that from you and I might be driven to veganism ;)

    -TAB

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