Fibee News: Superprice me!

The fast food chain Mc Donald’s has just released a quarterly copy which is giving investors an appetite, after the successive disappointments of tech stars, like Alphabet, Microsoft or MetaPlatorms. It must be said that Ronald Mc Donald is a past master in the art of changing his prices, without affecting demand…

Let’s start by asking ourselves about the model of the restaurant chain. What does it actually offer? Meals at any time? There is no question here of going into the identification of the various trades of the firm, and into the analysis of its value chain, but it appears that the added value is not in its contribution to food. Let’s put the question another way: what is this scary old ginger clown selling? Laconic answer: salt, sugar, and fat, the famous trio that makes you addicted to industrial food.

Michael Moss, in “Sugar, Salt, and Fats, How Industrialists Are Getting Us Addicted”, Pulitzer Prize winner, shows, internal notes and testimonials from former executives in support, how the saturation in salt, sugar and fat is cynically calculated to manipulate our brains. So let us once again ask ourselves the question about what Mc Donald’s is offering: a carefully dosed chemical “optimum”, which, by manipulating the hypothalamus, quickly reaches the “point of bliss”, which makes the desire to start again, while being aware of the damage to health (diabetes, obesity, depression).

Now, and without transition: what is pricing power? It is the capacity for a company to increase its selling prices without negatively impacting demand. In other words, in an inflationary period, the ability to make the consumer bear the surges in raw materials and energy. That’s exactly what the stock market is applauding today, with Mc Donald’s Corp stock price at $265.80, close to all-time highs.

“Our performance in the third quarter of 2022 demonstrated broad-based commercial momentum, global sales [à nombre de magasins comparable] increased by nearly 10% [+9,5%, ndlr]. I remain confident in our ‘Accelerating the Arches’ strategy as our teams around the world continue to do great work,” said Chris Kempczinski, President and CEO of McDonald’s. “As the macroeconomic landscape continues to evolve and uncertainties persist, we operate from a position of competitive strength. I also want to thank our franchisees, who have done a tremendous job in this environment, while providing great value to our customers. »

Inflationary pressures, particularly on chicken, beef, labor and electricity, have caused the company to raise prices, and not just on the cheeseburger (1^time increase in 14 years this summer). The prices of fries and nuggets have risen sharply across the Atlantic, making the bill more salty… The customer is asking for more.

At 2^th quarter, sales, on a comparable number of stores basis, had already increased by 9.7%…

By Alexandre TIXIER for Fibee