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It’s never a good thing when executives with a multi-billion dollar consumer name get into a fight on the Internet. Even if they are right.
McDonald’s was in the spotlight this week as a victim of its own prices when news of an $18 (real) Big Mac meal sent social media into overdrive, with the high price for an allegedly cheap fast food chain blowing minds.
And true to form, fact-free “information” about inflation fanned the flames. Even the House Republicans’ X account got in on the action, joining the growing chorus claiming Big Mac prices have doubled since the pandemic.
With inflation moving so many prices, it seems no one knows how much anything costs anymore.
The Big Mac moment prompted a rapid expedition of corrective action from financial commentators and the company itself.
“In fact, Big Mac prices have increased an average of 21% since 2019, less than inflation of 23% and food inflation of 28%. And wages for non-supervisory workers have risen 28%, noted Nobel laureate Paul Krugman, suggesting that, in terms of real wages, paying for a citizen hurts less.
Our Chart of the Week shows it all: the real data.
But the most important “actually” came from the chain’s American president, Joe Erlinger.
“It frustrates and disturbs me, and many of our franchisees, when I hear of an $18 Big Mac meal being sold – even though it was at one U.S. location out of more than 13,700,” Erlinger wrote in a open letter.
“More worrying, however, is when people believe this is the rule and not the exception, or when people start suggesting that Big Mac prices have risen 100% since 2019,” the executive added, noting that it company “must remain focused on value and affordability.”
For investors, the appearance of the letter itself can convey an air of desperation and defensiveness. And this after the company’s results last month disappointed investors as customers spent less and visited less.
A look at the stock chart shows why.
The stock is up just 28% over the past five years, which is only in line with the gains of many of its customers. It’s a paltry gain next to the S&P 500’s 90% return, which we left off the chart because it would change the scale of the chart by almost an order of magnitude.
The $18 Big Mac tweet, which shows a view count of almost half a million, could also be another example of the Streisand effect, which draws lavish attention to a literal nothingburger.
But Erlinger is clearly concerned that the company’s current situation is fragile, and rumors on social media that McDonald’s is not affordable have spurred the team into action.
With its jingles, Dollar Menu, Value Meals, clown and Billions Served, McDonald’s has always been as much a marketing company as it is a hamburger chain.
And despite this strange open letter on the investor relations page, it’s hard to imagine the company getting the message across to its actual customers. We’ll see in fifteen minutes whether it makes a difference.
Ethan Wolff-Mann is a Senior Editor at Yahoo Finance and provides newsletters. Follow him on Twitter @ewolffmann.
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