Would a permanent McRib boost McDonald's profit?
Millions of Americans love the seasonal sandwich, so should the fast-food giant make it a full-time product?
McDonalds (MCD) has developed an almost cult-like following around its popular McRib sandwich.
Legions of fans call for the sandwich to return to the restaurant's menu every year, and are appeased when it appears for a month or so. Given its extreme popularity, would McDonald's benefit from adding the McRib to its menu full-time?
According to studies, the McRib helped sales increase by 4.8% in November 2010. While that's a great boost, Wall Street analysts and businesses themselves seek consistent growth.
As with many fads, the McRib has a cyclical demand. Consumers appear to clamor for the sandwich at the same time each year. If the McRib were added to the menu full-time, would we see the same trend?
The McRib is also considered a specialty item in the sense that it requires extra resources for each McDonald's restaurant. If you have ever eaten one, you know the pork patty is marinated in, and lathered with, barbecue sauce.
In a fast food environment, the only way to efficiently make sandwiches with patties of this texture is to basically have a vat of patties submerged in sauce. The McRib is literally the only item in the menu that uses this particular mechanism, requiring extra space and time for maintenance. If the McRib were to scale up to full time, would the extra costs add up to large headaches for McDonald's?
At this point, as McDonald's has only been promoting the McRib for about a month every year, it may not reserve dedicated distribution or production channels for the sandwich. If it were to suddenly keep it on the menu full-time, it would have to sign pig farmers full-time as well.
It would also have to increase distribution capabilities and increase marketing campaigns to maintain consumer demand. In other words, McDonald's may face significant costs if it were to seriously consider adding the McRib to the full-time menu.
McDonald's is a wildly successful company that seems to weather tough economic times. Its McRib sandwich has gained a unique following among consumers, but while it may be very popular, it may not be in McDonald's best interests to keep it as a full-time menu item.
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