Quotulatiousness

February 2, 2015

The Burger Wars of the 21st century

Filed under: Business, Food, USA — Tags: , — Nicholas @ 04:00

The old burger wars were between McDonald’s and its similar-but-slightly-different competitors like Burger King and Wendy’s. Peter Suderman says the new burger wars won’t follow the same pattern. The new battle will be more like plucky bands of humans hunting down woolly mammoths, as the smaller-but-nimbler chains start to encroach on the big chains’ traditional territories:

Hamburger fans, rejoice: Better burgers are winning the fast-food wars.

On Wednesday, McDonald’s — the biggest and most successful brand in fast food — announced that its current CEO, Don Thompson, would be stepping down. The departure comes on the heels of a lackluster earnings report and a steep drop in overall sales as competition from new entrants has increased.

This morning, shares of Shake Shack, a rapidly growing burger chain that grew out of a hot dog stand in Manhattan, shot up in price during the company’s first day of public trading. The restaurant chain has just 63 locations, but it’s now worth an estimated $1.6 billion.

The problems facing McDonald’s are obvious: Because it is so well known and so dominant, it has a hard time changing in response to market demand. Its success gives it access to tremendous resources, but its all-things-to-everyone approach, and the inevitable bloat that tends to accrue at any successful legacy business, leaves it vulnerable to new players that can do fewer things better — like, for example, Shake Shack.

It’s hard to imagine the fast food market without McDonald’s, but it was a very different world then. Here’s Mark Knopfler’s tribute-of-sorts to Ray Kroc, who turned the McDonald’s brand into one of the world’s most well-known and profitable companies:

i’m going to san bernardino ring-a-ding-ding
milkshake mixers that’s my thing, now
these guys bought a heap of my stuff
and i gotta see a good thing sure enough, now
or my name’s not kroc that’s kroc with a ‘k’
like ‘crocodile’ but not spelled that way, yeah
it’s dog eat dog
rat eat rat
kroc-style
boom, like that

the folks line up all down the street
and i’m seeing this girl devour her meat, now
and then i get it, wham as clear as day
my pulse begins to hammer and i hear a voice say:
these boys have got this down
oughtta be a one of these in every town
these boys have got the touch
it’s clean as a whistle and it don’t cost much
wham, bam you don’t wait long
shake, fries patty, you’re gone
and how about that friendly name?
heck, every little thing oughtta stay the same
or my name’s not kroc that’s kroc with a ‘k’
like ‘crocodile’ but not spelled that way, now
it’s dog eat dog
rat eat rat
kroc-style
boom, like that

you gentlemen ought to expand
you’re going to need a helping hand, now
so, gentlemen well, what about me?
we’ll make a little business history, now
or my name’s not kroc call me ray
like ‘crocodile’ but not spelled that way, now
it’s dog eat dog
rat eat rat
kroc-style
boom, like that

well we build it up and i buy ’em out
but, man they made me grind it out, now
they open up a new place flipping meat
so i do, too right across the street
i got the name i need the town
they sell up in the end and it all shuts down
sometimes you gotta be an s.o.b.
you wanna make a dream reality
competition? send ’em south
if they’re gonna drown put a hose in their mouth
do not pass ‘go’ go straight to hell
i smell that meat hook smell
or my name’s not kroc that’s kroc with a ‘k’
like ‘crocodile’ but not spelled that way, now
it’s dog eat dog
rat eat rat
kroc-style
boom, like that

August 3, 2014

NLRB decision would “stick a fork in the franchise model”

Filed under: Business, Economics, Food, USA — Tags: , , — Nicholas @ 10:08

In Forbes, Tim Worstall explains why the recent decision by the US government’s National Labour Relations Board could destroy the franchising business model widely used by fast food chains:

The National Labor Relations Board (NLRB) made a very strange decision last week to rule that McDonald’s the corporation, was a joint employer of the staff in the franchised restaurants. It was, of course, at the urging of those labour activists who would like to union organise in the sector. Dealing with one national company is obviously going to be easier than dealing with thousands of independent business owners. There’s a number of problems with this decision ranging from the way that it overturns what has long thought to be settled law, to it obviating already signed contracts but perhaps the greatest problem is that it calls into question the entire validity of the franchise system.

[…]

The franchisor though gets paid a percentage of pure sales: what the labour costs at the franchises is is no skin off their nose at all. So they’ll not control it. The only major input that the franchisee can control in order to determine profitability would now become, at best, a join venture and we’ve different incentives for each side of the bargain. That’s just not going to work well. I don’t think that Pudzer is being alarmist in stating that this ruling would stick a fork into the franchise model as a whole. You simply can’t have such a system where the franchisees don’t control any of their inputs.

Of course, it’s still open to someone to argue that the franchise system shouldn’t actually exist, that it would be a good thing if everyone were either a truly independent organisation or part of a large and centrally managed group. But if that is the argument that’s being made, or will be made, then it’s a large enough change that it really needs to happen through political means, not administrative law. That means that if Congress wants to change the rules in this manner then that’s up to Congress. But it really shouldn’t be done by the decision of an administrative agency.

April 23, 2014

Happy Meal toys as human rights violations

Filed under: Business, Food, Law, USA — Tags: , , , , , — Nicholas @ 09:16

Amy Otto on the attempt to sue McDonald’s because they were handing out “gendered” toys with their Happy Meals:

A recent article in Slate by Antonia Ayres-Brown, a junior in high school, details the valiant feminist struggle she ultimately brought to the Connecticut Commission on Human Rights and Opportunities against McDonald’s for … discriminating on the basis of sex in the distribution of Happy Meal toys. “Despite our evidence showing that, in our test, McDonald’s employees described the toys in gendered terms more than 79 percent of the time, the commission dismissed our allegations as ‘absurd’ and solely for the purposes of ‘titilation [sic] and sociological experimentation,’” she wrote.

Let’s leave aside the fact that Connecticut has a Commission on Human Rights and note that this girl sincerely believes McDonald’s offering toys described, at times, as being for a girl or for a boy is a human rights violation.

While I admire the girl’s plucky disposition and effort, I do hope one day she learns to channel her energy into productive uses that will advance her cause in positive ways. This could have all been solved by her parents simply encouraging her to ask for the toy she wants. If girls are continually taught that they as individuals have no power to negotiate a situation as simple as “I’d like that toy” without the Connecticut Commission on Human Rights getting involved, I submit that these women are proving the case that they should not be put in positions of leadership or power.

By the author’s own admission,“McDonald’s is estimated to sell more than 1 billion Happy Meals each year.” Yet it does not occur to her that the fast food worker giving a “girl’s” toy to a girl is simply trying to give the customer what she wants in the most expeditious manner possible. This is a company that sells a billion of these things a year and gets them in the hands of their customers as fast as possible.

People do not eat at McDonald’s to get into a gender studies discussion with the teenage kid at the register; they go there to get food fast, hence the term “fast food.” If the author had worked in fast food for any nominal period of time, she might realize that the employee’s main motivation is not to spend any time persecuting women but to make it through his or her shift as painlessly as possible.

July 29, 2013

“Junk food costs as little as $1.76 per 1,000 calories, whereas fresh veggies … cost more than 10 times as much”

Filed under: Economics, Food, Health, USA — Tags: , , , , — Nicholas @ 10:35

Making a case for the McDonald’s McDouble as the greatest food in human history:

What is “the cheapest, most nutritious and bountiful food that has ever existed in human history” Hint: It has 390 calories. It contains 23g, or half a daily serving, of protein, plus 7% of daily fiber, 20% of daily calcium and so on.

Also, you can get it in 14,000 locations in the US and it usually costs $1. Presenting one of the unsung wonders of modern life, the McDonald’s McDouble cheeseburger.

The argument above was made by a commenter on the Freakonomics blog run by economics writer Stephen Dubner and professor Steven Leavitt, who co-wrote the million-selling books on the hidden side of everything.

Dubner mischievously built an episode of his highly amusing weekly podcast around the debate. Many huffy back-to-the-earth types wrote in to suggest the alternative meal of boiled lentils. Great idea. Now go open a restaurant called McBoiled Lentils and see how many customers line up.

But we all know fast food makes us fat, right? Not necessarily. People who eat out tend to eat less at home that day in partial compensation; the net gain, according to a 2008 study out of Berkeley and Northwestern, is only about 24 calories a day.

The outraged replies to the notion of McDouble supremacy — if it’s not the cheapest, most nutritious and most bountiful food in human history, it has to be pretty close — comes from the usual coalition of class snobs, locavore foodies and militant anti-corporate types. I say usual because these people are forever proclaiming their support for the poor and for higher minimum wages that would supposedly benefit McDonald’s workers. But they’re completely heartless when it comes to the other side of the equation: cost.

Update, 30 July: Stephen Dubner notes that the Kyle Smith story has triggered “about one zillion” media requests for more comment on the original post, but that he’s too busy writing to take time out to respond.

July 18, 2013

Foodstamps as a form of corporate welfare

Filed under: Business, Government, USA — Tags: , , , , , — Nicholas @ 09:43

Mike Krieger explains how the US foodstamp program can be seen as a form of corporate welfare:

This ridiculously condescending budget put out by McDonald’s in partnership with Visa has been making the rounds today. I’ll allow excerpts from the Gothamist article on it and their corresponding video do most of the explaining, but the key point I want to hammer into people is that food stamps are corporate welfare. They actually are not welfare for the workers themselves, who undoubtably don’t have wonderful lives. What ends up happening is that because the government comes in and supplements egregiously low wages with benefits like food stamps, the companies don’t have to pay living wages. So in effect, your tax money is being used to support corporate margins. Even better, many of these folks who get the food stamp benefits then turn around and spend them at the very companies which refuse to pay them decent wages. Who benefits? CEOs and shareholders. Who loses? Society.

From the Gothamist post by Nell Casey:

Let’s take a look at what else McDonald’s imagines its employees’ expenditures should look like. First off, the site sets employees’ mortgage/rent at $600, which even if we didn’t live in an outrageously expensive city is still a laughably small figure. Next, the site tallies health insurance at a mere $20 per month. Where is this magical land of nearly free independent healthcare? We want Obama’s unicorn to fly us there! Also as a McDonald’s employee, your cable and phone bills should only come to $100 a month (HA!), your electric bill should hover around $90 (for serious?) and apparently if you work at a fast food chain there’s absolutely no need to ever buy any food ever. Maybe they offer employees a lifetime supply of fries?

So tallying up all of these totally realistic expenses, a McDonald’s employee would need to net $2,060 per month to make this budget work. Broken down, that would mean working at least 40 hours per week and making at least $15 an hour pre-taxes to earn the necessary $12.86 an hour. Currently, McDonald’s workers earn an average of $8.25 per hour, barring any funny business.

Update: A couple of comments have been logged on this post, and Megan McArdle’s first Bloomberg column also addresses the McDonalds/Visa budget thingy:

Speaking of food, a sample budget put together by Visa Inc. and McDonald’s Corp. is rocketing around the Internet. Most of the commentary suggests that McDonald’s is heartless, and gauche, to suggest how its employees might live on the embarrassingly paltry wages that they are paid. (According to the Census Bureau’s American Community Survey of 2009-11, median earnings for a fast-food worker were $18,564 a year.) The budget is based on two jobs, which has aroused special ire: Is McDonald’s telling its employees to get a second job so they don’t have to pay them anything?

[…]

Keep in mind that most McDonald’s workers don’t live close to New York City or Washington, the sources of much of the commentary I’ve seen. These are, respectively, the first- and fourth-most-expensive cities in the country. In many areas, the median after-tax household income is not that far from that on the McDonald’s worksheet, and it’s pretty easy to rent a room in a friend’s house for less than $600 a month. Memphis, Tenn., for example, has a median household income of $35,000, which, according to Paycheckcity.com’s take-home calculator, would give a single person about $2,300 a month after taxes. And that’s the median — 50 percent of the city is below that. You should not develop a theory of household finance that declares that the city of Memphis does not exist.

Survival on such a lean budget is possible because people who do it are not trying to live the atomized life of an upper-middle-class college graduate. They band together, sharing rent, cars and cash when needed, handing down clothes and generally spreading fixed costs over as many people as possible.

Should McDonald’s pay enough to support a thrifty-but-not-too-difficult independent lifestyle? Is that now the minimum decent standard for society? Obviously, a lot of people think that they should. Washington’s City Council just passed a “living wage” law directly targeted at Wal-Mart Stores Inc. that aims to force the retailer to pay its workers $12.50 an hour.

What would that look like nationwide? Let’s set the floor a little above the amount in the budget — about $27,500 after taxes, which will allow them to enjoy the full McDonald’s budget, plus health insurance on an exchange. That’s a minimum wage of $13.75 an hour for a full-time worker, almost double the current minimum; obviously, everyone else would also have to be paid more. The minimum that a two-earner household could bring in would be $55,000 a year — not that far from the current median income for a two-earner household.

Even if it were possible to mandate that everyone in the country make almost the median income, this would come with a cost; I’d guess that most economists would agree that such a hike in the minimum wage would cause fairly significant job losses.

March 15, 2013

Britain’s class system may have changed, but the snobbery is still all-pervasive

Filed under: Books, Britain, Food, Media — Tags: , , , , — Nicholas @ 09:06

Tim Black reviews Consumed: How Shopping Fed the Class System, by Harry Wallop.

In short, class has stopped being the basis for a political identity; it has become a form of identity politics. As Wallop puts it: ‘Class is no longer what we do with our hands nine to five, it is what we do with our wallets at the weekend. How that money arrives in our wallets must play a part, but how we define ourselves and how others view us mostly comes down to the weekly drive to the local retail park, rather than the daily trudge to the factory.’

Consumed is a snarking and sniping attempt by Wallop, a consumer affairs writer at the Daily Telegraph, to anatomise these new consumerist class identities. At the upper end are the super-rich Portland Privateers, named after the private Portland Hospital in central London, where pregnancies come to fruition with the obligatory C-section at the cost of several grand and the toiletries are Molton Brown. Then in descending order come: the Rockabillies, defined by their love of a British holiday, ideally in the Cornish town of Rock; the Wood-Burning Stovers, who love a wood-burning stove almost as much as they love the Guardian; the Middleton Classes, who – like Carole Middleton, the Duchess of Cambridge’s mother – have vaulted up the social ladder, usually taking in a grammar school en route; the Sun Skittlers, a resolutely old-school working-class identity devolving upon reading the Sun, playing skittles, and earning enough to have bought one’s own home; the Asda Mums, who spend wisely, but take safety in big, well-known brands; and the Hyphen-Leighs, whose much sneered-at social aspiration is marked out by the unusually spelled double-barrelled names and the commitment to high-status brands, from Burberry to Paul’s Boutique. Other monikers crop up throughout, but these are the main ones.

If Consumed sounds rife with all forms of snobbery, from the inverse to the outright, that’s because it is. And this ought to be expected, too. In a society in which how you consume has been allowed to determine your identity, then snobbery, which was always a vice of the consuming class par excellence, the non-productive aristocracy, is bound to flourish. It allows groups to include initiates and to exclude the vulgar. Hence, as Wallop relentlessly details, the consumption choices of other people (and it is always other people) have now become objects of mockery and often condemnation.

[. . .]

As Wallop records, eating out in the 1950s was for many limited to Lyons Corner Houses or fish-and-chip shops. And it wasn’t just the high-cost of restaurants that deterred many; the arcane rituals of the hotel dining experience were equally off-putting. This is why, argues Wallop, the British embraced the classless, ritual-free environs of the fast-food joint, first in the form of Wimpy and latterly in the shape of McDonald’s or Burger King. ‘Of course, eating out in fast-food places, or indeed any places, never became a classless activity’, writes Wallop. ‘Classless merely became a euphemism for working class. No more so than with fast food, which over time took on a demonic quality, at least in the eyes of those who refused to eat it. Junk food for the junk classes.’

Junk food for the junk classes. In that one sentence, Wallop touches upon the crucial conflation of the object of consumption with those consuming. When Wood-Burning Stovers complain about McDonald’s, they are really complaining about the type of people that eat there.

February 25, 2012

Burger King latest corporation to pull out of UK work experience program

Filed under: Britain, Bureaucracy, Economics, Government — Tags: , , , , , — Nicholas @ 10:14

The British government’s work experience program for unemployed would-be workers loses another employer:

The fast food giant said it had decided to cease its involvement in the Get Britain Working programme because of recent concerns expressed by the public.

The scheme has attracted growing criticism in recent weeks with opponents describing it as a form of slave labour because young people worked for nothing, while keeping their benefits.

Burger King said it had registered for the programme six weeks ago intending to take on young people for work experience at its Slough headquarters, but had not recruited anyone.

It sounds like the program was well intended — allowing people without work experience to at least have something to put down on a resumé — but fails the PR test because the corporation is seen as “getting work for nothing”. And, without a doubt, some corporations will use the program in exactly that way. Despite that, on balance it seems that the potential benefit to young entrants to the work force is greater than the actual benefit to the companies that get that “free labour”.

The value of that “free labour” may well be lower than the costs to the employer for training them: new employees with no marketable skills are not the bonanza of profit that some seem to think that they are. Some people I worked with early in my working life could be proven to be a net loss for months after hiring …

October 6, 2009

Another bulletin from the “Institute of Obvious Findings”

Filed under: Food, Health, Law, USA — Tags: , , — Nicholas @ 16:02

New York City has the most “progressive” laws on the books for labelling fast food menu items. The intent was to ensure that customers would be aware of the calorie and nutrition values of food before ordering, with the hope being that people would deny their tastebuds and order less fattening foods. A recent study found — to nobody’s surprise — that this hasn’t been working:

A study of New York City’s pioneering law on posting calories in restaurant chains suggests that when it comes to deciding what to order, people’s stomachs are more powerful than their brains.

The study, by several professors at New York University and Yale, tracked customers at four fast-food chains — McDonald’s, Wendy’s, Burger King and Kentucky Fried Chicken — in poor neighborhoods of New York City where there are high rates of obesity.

It found that about half the customers noticed the calorie counts, which were prominently posted on menu boards. About 28 percent of those who noticed them said the information had influenced their ordering, and 9 out of 10 of those said they had made healthier choices as a result.

But when the researchers checked receipts afterward, they found that people had, in fact, ordered slightly more calories than the typical customer had before the labeling law went into effect, in July 2008.

The laws were changed because paternalists in power thought that consumers were being gulled against their better instincts, and that merely pointing out the information in a hard-to-miss fashion would assist these poor, weak-willed eaters to trim back on calories and fat. It doesn’t work because people like eating food that’s calorie-rich and fattening. You’re not going to change that without instituting literal rationing: and don’t think they haven’t considered it.

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