Posted on Nov 13, 2011

A Conspiracy of Hogs: The McRib as Arbitrage

The absurd scale of McDonald’s’ economics suggests a company more like a commodity trader than a chain of restaurants.

At this volume, and with the impermanence of the sandwich, it only makes sense for McDonald’s to treat the sandwich as a sort of arbitrage strategy: at both ends of the product pipeline, you have a good being traded at such large volume that we might as well forget that one end of the pipeline is hogs and corn and the other end is a sandwich. McDonald’s likely doesn’t think in these terms, and neither should you.