In hard times, hungry consumers still flock to the Golden Arches.
- By Frederick KaufmanFrederick Kaufman is the author, most recently, of Bet the Farm: How Food Stopped Being Food.
In late September 2008, when global stock markets fell off a cliff, a funny thing happened to McDonald’s. While the financial industry and consumer goods were cratering, same-store sales rose 8.2 percent the next month. And remember Morgan Spurlock’s damning 2004 documentary, Super Size Me, which painted the fast-food giant as the corroded heart of America’s obesity crisis? Since then, the company’s share price has nearly quadrupled, making MCD’s stock ticker look more like a hockey stick than the peaks and valleys of the Golden Arches. While the opening of a new McDonald’s (there are already some 33,500 in 119 countries and counting) might not have the buzz of an Apple Store launch, Mickey D’s is a Wall Street darling, and a savvy customer too, constantly tweaking providers to lower costs while passing the savings on to budget-conscious consumers.
McWorld may not save us from global jihad, the ravages of interstate conflict, or the eurozone financial collapse, but in a cow-hungry world, the plastic contours of the planet’s largest restaurant chain shimmer with promises of long-term prosperity. After weathering everything from scalding-coffee lawsuits, cringe-inducing calorie labeling, and tides of anti-globalization food rioters, the evil empire of burgers and fries finds itself in an excellent spot to prosper in nasty and brutish times. The sad truth is that in most of the world, the McDonald’s menu doesn’t scream antibiotic-addled livestock and high-cholesterol death diets; instead it whispers of middle-class aspiration. Who in São Paulo or Shanghai has heard of Jonathan Safran Foer, much less his plea: Can’t we all be vegetarians and get along?
Still, skeptics ask: Haven’t we hit "peak burger"?
The question implies an egregious misreading of McDonald’s philosophy and history. A long time ago, burgernomics evolved into chickenomics. Today, McOptimization of priorities has cooked up a feast of cross-cultural patronage: In New Delhi you’ll find the McAloo Tikki spiced-potato sandwich and in Tokyo, the Ebi Filet-O shrimp burger. McDonald’s is no longer foisting burgers and American values on its booming numbers of international patrons; it’s offering burgers and local fare, and, yes, value.
McDonald’s understands the wellsprings of its success, which is why it has seen its stock rise more than 500 percent in the past decade. The top burger brass has learned to listen to the mothers who called for salads, snack wraps, oatmeal, and apples. And McDonald’s listens to Wall Street, where the message is just as clear: Drive down costs. Make efficiency your god. Deliver value. It has jettisoned other chains such as Chipotle, Boston Market, and Pret A Manger, which means no more distractions from border skirmishes with Panera, Burger King, and manifold franchises. And though 7 percent of Americans ate at a McDonald’s yesterday, there are a lot of Chinese folks who haven’t had the pleasure. So the Golden Arches announced last year that it plans to open 700 new restaurants in the Middle Kingdom by 2013. Plus, in these tough economic times, it’s hard to hate a company that hires an estimated 1 million Americans each year.
Of course, tough times lie ahead for ingredient purchasers of all stripes, as agricultural futures spike for the third time in five years and speculative profit-grabbing takes over grain markets. But MCD’s global risk-management acumen matches its global purchasing power. U.S. and Russian grain may be scarce this fall, but Brazil will post a great harvest — and no hamburger bun I’ve ever seen has noted its point of origin.
There will be headwinds, for even fast-food giants rely on inputs subject to the whims of climate change, speculation, biofuel mandates, and flavors of the month. But while mango pineapple smoothies and a tanking euro may come and go, the human body’s demand for cheap, tasty food endures — recession or no recession. Today, there’s a percolating spring of profit in McCafé lattes – not to mention a quarter of the daily calories a human being requires in a single chocolate chip frappé. Macroeconomics is one thing; stomachs another — and that may be the most important reason the ghost of founder Ray Kroc can sleep easy.
Ronald and friends fight hard on behalf of their customers’ wallets, in good years and bad. The day a Big Mac costs $20 isn’t the death of the McDonald’s business model, nor the demise of the brand. The day a Big Mac costs $20 will be the end of the world.
Daniel W. Drezner is professor of international politics at the Fletcher School of Law and Diplomacy at Tufts University and a senior editor at The National Interest. Prior to Fletcher, he taught at the University of Chicago and the University of Colorado at Boulder. Drezner has received fellowships from the German Marshall Fund of the United States, the Council on Foreign Relations, and Harvard University. He has previously held positions with Civic Education Project, the RAND Corporation, and the Treasury Department.| Daniel W. Drezner |