McDonald’s misses Q2 estimates across the board, as consumers pull back on dining out.
Nonetheless, McDonald’s stock surged $10, suggesting it’s not a big deal or that the worst is over:
No one cares that the food is more expensive. It’s not as big of a deal as the media hype would suggest. There is still huge demand. McDonald’s, like Chipotle and Wing Stop, has become yet another ‘premium product’ for the upper-middle-class. That is the biggest customer base right now. It’s a misconception that only poor or lower-middle-class people consume fast food or that fast food is most popular with those people. Maybe this was true decades ago, but not anymore.
Same for the usual narrative is that poor people are disproportionately obese because they disproportionately consume fast food, but upper-middle-class people consume fast food too, like pricey calorie-filled Chipotle bowls or Wing Stop, and also become obese, but the difference is they can afford Wegovy.
The people who are spending $40+/day on Chipotle and other premium fast food are not by any stretch poor. They have tons of disposable income and good jobs. 10-15 years ago the thought of lunch being a premium or luxury experience was inconceivable, but that is where we’re at now. Spending $100 for two on lunch or dinner has become the ‘new normal’ or an afterthought. It’s not just fast food, but Americans are clearly willing to spend a premium for flavorful food and large portions from independent sellers or smaller chains.
Consider that there is this entire niche on YouTube and TikTok where young people make 60-second reviews of inordinately-expensive fast food (e.g. hotdogs, breakfast sandwiches, and other calorie-dense food) from local restaurants (not chains). These videos not uncommonly go viral, with thousands of up-votes and approving comments. The video below got 2 million views and 600 comments:
This is why social media narratives are sometimes confusing or contradictory. A common narrative on social media is that:
1. Obesity is a major health crisis
2. Calorie-dense junk/fast food are major contributors to obesity
3. Food inflation is out of control
Yet it’s not uncommon for these reviews to cost $60 or more in food. This suggests that that price is not a factor and a willingness to consume this expensive and unhealthy food despite the known health risks and the cost. $15 for an artisan hamburger (no sides) is too expensive even if it’s delicious.
So which narrative is correct? Why are the videos so popular if the food is so unhealthy and expensive? Why are they not eating beans or apples instead, which are cheaper and healthier than egg sandwiches fried in butter, and then filming that? It may not go as viral, but it would be setting a better health example and much cheaper.
Americans, particularly on social media, seem to have a love-hate relationship with food. These reviews are not uncommonly juxtaposed with fitness content and people in the comments warning of the obesity problem. So these same people praising and consuming this calorie-rich food are at the same time warning of obesity in America and trying to get in better shape.
There is a sort of cognitive dissonance in both voicing concerns about obesity or food inflation, yet consuming the very food that is causing it, or watching a video that glorifies this food.
Maybe it also shows the disconnect between social media and the real world. In the latter, such concerns about health or virtue signaling about nutrition as expressed on social media, go out the window when the world is no longer watching. Or maybe no one is fully logically consistent in their views. In the end, people will continue to consume this food even knowing full-well it’s unhealthy and overpriced. And for that, McDonald’s should not be too concerned.