McRib Mystery Solved?

McRib Mystery Solved?

The answer to the distribution mystery may lie in commodities trading

 

Willy Staley at The Awl has analyzed the McRib's availability pattern with one of my favorite tools (economics) and come up with an interesting correlation. 
 
Staley's contention is that the McRib's availability is driven strictly by the price of pork. When the price gets low enough, McDonald's buys a ton of it and ships it out (with much fanfare) in the form of McRib sandwiches. As soon as the price rises, the McRib disappears. In other words, the McRib distribution is all about arbitrage.

 
("Arbitrage" is the practice of taking advantage of price differentials in different markets. If you buy a rare Depression Glass dish at a garage sale for $1 and sell it on eBay for $50, you have just used arbitrage to earn $49.)
 
I have no doubt that there is a lot of truth to this theory. After all, as Staley points out, McDonald's is not actually in the business of making food. It is a commodities broker. McDonald's could be shipping oil or paper just as easily as it could be brokering the transactions between field potatoes and French fries.
 
But at the same time, there is clearly some room for discussion here. For one thing, the theory hinges on McDonald's not using very much pork most of the time. However, most of their breakfast offerings contain pork. Could it simply be that, due to the way they are made (i.e. with lots of filler), breakfast pork simply has a higher profit margin than McRibs? If so, then it would make McDonald's more philosophic about price differences. You can afford to pay a little more per pound here and there if you're making 98% profit on the end item.
 
And indeed, Staley quotes an alleged Hamburger University graduate who claims that the McRib has a very narrow profit margin. He frames it as a loss leader - the excitement gets you in the store, and then you buy a soda and fries to go along with it.
 
But the most damning evidence against this theory may be the data itself. Every time after the McRib is introduced, the price of pork continues to fall for a while. Could this really be true, if McDonald's was buying a nation's worth of pork? Surely this would stabilize the price, if not drive it back up. Obviously there is a lot more going on here than we can see, but I think Staley has definitely illuminated part of the puzzle.