McDonald's struck gold when the fast-food giant teamed up with Travis Scott earlier this year.
The "Travis Scott Meal" was so successful that some locations ran out of Quarter Pounder ingredients, something that had not happened when meatpacking plants shuttered earlier in the pandemic. Scott's line of merchandise swiftly sold out. Analysts applauded the deal, which helped McDonald's reach Gen Z customers.
Perhaps the most impressive part of the plan was that it didn't require McDonald's to add a single item to the menu. The so-called "Travis Scott Meal" was a Quarter Pounder with cheese, bacon, and lettuce, medium fries with BBQ Sauce, and a Sprite - all well-known, existing menu items. Yet, Scott's name was enough to make the chain start running out of burgers.
"His ability to kind of see where culture is going and have a hand in where culture is going is really unique," McDonald's Chief Marketing Officer Morgan Flatley told Business Insider in September. "Then you couple that with his huge followership and his fans, social-media footprint, and ... 3 billion streams. He just has an incredible audience."
McDonald's partnership with Scott paved the way for a new type of celebrity-inspired menu item, both at McDonald's and other chains, including Chipotle and Dunkin'.
Why the new celebrity menu item makes sense in 2020
At the same time, new and limited-time offerings create buzz and a sense of urgency among potential customers. When a new item hits menus, it helps make the chain feel more relevant. And, if the menu item is only going to be there for a few months, it helps convince people that now is the time to visit.
The new era of celebrity menu items, such as the Travis Scott Meal, allows chains to harness the buzz of a new menu item without actually adding anything to menu.
McDonald's followed up its partnership with Scott with a collaboration with reggaeton star J Balvin. According to Flatley, McDonald's wanted to work with stars like Scott to win over younger customers. According to Flatley, people under the age of 34 are "becoming more and more challenging for brands to reach."
"How they engage with media is different," Flatley said. "They look to recommendations much more than any other generation has. They're very reliant on social media. They're very reliant on their friends."
'The Charli' cold brew and the 'Guac is extra but so is Miley burrito'
McDonald's isn't alone in rolling out celebrity menu items in 2020.
In December, Chipotle rolled out its own celebrity menu item inspired by singer Miley Cyrus. The dish was called the "Guac is extra but so is Miley burrito" - and, of course, only used ingredients already found at Chipotle. Chipotle previously launched a challenge on TikTok in November, in which three winners had their orders added to the app as official menu items.
Dunkin' debuted The Charli, named after TikTok star Charli D'Amelio, in September. The cold brew beverage only used ingredients that were already available at the chain. However, it still drove a 57% increase in app downloads compared to the previous 90 days and significantly boosted cold brew sales, according to UBS.
"Certainly, the drink had a lot of popularity with Gen Z, which obviously is super important," Drayton Martin, Dunkin's vice president of brand stewardship, recently told Business Insider. "You need to continue to bring younger people into the brand family if you want to stay healthy."
"Also, the younger generations are actually bellwethers that then cascade to the loser Gen Xers who are still desperately clinging onto coolness - not that I'm describing myself or anything," Martin added.
Martin said that Dunkin' is always scheming and playing around with different options as it considers future partnerships. Like Flatley at McDonald's, she said that Dunkin' only wants to team up with celebrities that are genuinely fans of the brand - though that is only the first of many considerations.
"Will this help with that aspiration of: 'Wow, I didn't expect this from Dunkin'?" Martin said. "Obviously, [we consider if we] can we punch above our weight in terms of earned media? Is it interesting? Is there a story here? All of those are factors that go into it."
The final days of 2020 brought one last Affleck-Dunkin' sighting. Paparazzi caught Affleck, decked out in Boston gear, fumbling an order of iced coffees and Munchkins on the doorstep of his California home. The photos went viral, as photos of Affleck and Dunkin' are wont to do.
"Ben Affleck is a pap favorite," Bobby Finger and Lindsey Weber, hosts of the celebrity podcast Who Weekly, told Business Insider in an email. According to the hosts, Affleck is known for just being himself, "a dude from Boston."
"And aside from the Red Sox and clam chowder, Dunkin' Donuts is as Boston as it gets," Finger and Weber added.
Affleck's appreciation for Dunkin' isn't new. But, over the last few years, his love for the chain has transcended from a quirky talk show talking point to a sort of cultural touchstone.
When Dunkin' announced it was closing locations earlier this year, Jezebel asked: "What Does Ben Affleck Think About Dunkin Donuts Closing 450 Stores?"
A social media rumor sparked a Vulture investigation into if Dunkin' keeps Affleck's order on file. (Conclusion: Dunkin' says no, so, probably not?)
Affleck's love for Dunkin' has spawned endless tweets, further linking the actor and the chain.
Carrie Wittmer, a freelance writer who has tweeted about Affleck and Dunkin' with some frequency, said she thinks of Affleck as an accidental Dunkin' influencer.
"I have always been a Dunkin' Donuts coffee fan," Wittmer said. "My parents are coffee snobs and Dunkin' was one of the only fast food places they got coffee from and I usually have Dunkin' coffee for my home brew."
But, Wittmer said, Affleck has made her think about Dunkin' even more than usual this year.
As Affleck's paparazzi shots with Dunkin' proliferate, they have sparked questions regarding Affleck's relationship with the chain. After all, Dunkin' has rolled out some wild marketing in 2020, from a partnership with Homesick candles to a merch lineup that includes bedding and scrunchies. A sponsorship deal with Ben Affleck would not be out of the realm of possibility.
Is Affleck getting paid by the coffee chain as part of a stealth sponsorship deal? Or, does he just really love Dunkin'?
Is Dunkin' paying Ben Affleck to drink coffee?
We needed answers from Dunkin', both about Affleck and some of the chain's official marketing strategies. (Again, Dunkin' successfully launched a $34 Homesick candle that smelled like coffee.) So, earlier in December, Business Insider spoke with Drayton Martin, Dunkin's vice president of brand stewardship.
"He is a true lover of the brand and it is all his spontaneous expression," Martin said.
"We love Ben Affleck. ... He's obviously from the Boston area and a terrific brand ambassador, but that's his own doing," she added.
Martin's answer lines up with Weber and Finger's conclusion that "Ben just genuinely has gotta have his Dunkies."
"If it's all some sort of covert paid sponsorship, congrats to Ben," they said. "But if there's anything to know about doing ads, it's that it's basically work and work tends to ruin things you love! It appears that Ben truly still loves his java."
In other words, Affleck's Dunkin' obsession has become the best kind of free advertising. It is coming from someone that genuinely loves the brand, with a passion that won't be tarnished by a paycheck. As a frequent paparazzi target, Affleck gives Dunkin' more face time than celebrities who avoid photographers (or, who are more low key about their love for Dunkin'.)
Anecdotally, it's a relationship that is paying off for Dunkin'. Finger said he has found himself craving Dunkin' after seeing yet another paparazzi shot of Affleck with his iced coffee. (Weber said she is always craving Dunkin'.) And, while Whittmer said she would have bought the Dunkin' Homesick candle without Affleck's influence, the Affleck-Dunkin' connection has made her appreciate both more in 2020.
"I have always loved both, but I have never thought more about either," Whittmer said.
A social media misstep sparked an unlikely battle between Republican Sen. Josh Hawley and Walmart on Wednesday.
On Tuesday, Hawley tweeted that he planned to object to the certification of the Electoral College vote on January 6, citing baseless claims of voter fraud. Experts say that the challenge is extremely unlikely to succeed, with President-elect Joe Biden's victory over President Donald Trump confirmed by the Electoral College on December 14.
In a since-deleted tweet, Walmart's social media account responded to Hawley. The tweet reads: "Go ahead. Get your 2 hour debate. #soreloser."
Walmart said in a statement to Business Insider that the tweet "was mistakenly posted by a member of our social media team who intended to publish this comment to their personal account."
"We have removed the post and have no intention of commenting on the subject of certifying the electoral college," the statement continued. "We apologize to Senator Hawley for this error and any confusion about our position."
Hawley responded by asking Walmart to "apologize for using slave labor" and "the pathetic wages you pay your workers as you drive mom and pop stores out of business."
While many small businesses have suffered during the pandemic, Walmart's business has been booming. According to the nonprofit Opportunity Insights, the number of small businesses in the US has dropped by 29% since January. Walmart's shares increased by 22% so far in 2020.
"I want to wrap up by saying congratulations to President-elect Biden," McMillon said on a call with investors. "We look forward to working with the administration and both houses of Congress to move the country forward and solve issues on behalf of our associates, customers, and other stakeholders."
Experts say that the ad feels like it is everywhere because of a mix of brand safety miscalculations, re-targeting marketing strategies, and the fact that the strange and sexual ad sticks with viewers.
"The reality is we all see the same weird ads all the time but they don't capture our attention like this one," said StitcherAds cofounder Conor Ryan.
IVRose appears to be a fast-fashion brand backed by a Chinese manufacturer, aiming to cash in by selling directly to consumers, according to experts.
The brand declined to comment on the ad, telling Business Insider: "sorry, we can't help you."
One of the top queries: Why they hell was everyone reading the article being bombarded with ads for bottomless pajamas?
Many readers reported seeing ad after ad for butt-flap PJs made by fashion brand IVRose. The ad is meant to promote the Plain Functional Buttoned Flap Adults Pajamas, priced at $26.99 (with a wealth of discounts available if you buy more than one pair).
I was among the many people who was confronted with the ad when I was reading the story in Elle on Sunday. As I saw others reveal that they had also been served the butt-flap PJ ad, I decided it was time to dive deeper into the world of ass-less pajamas.
Why was everyone getting the same ad in the Elle article? Why had this ad started popping up elsewhere around the internet more recently? And, who is even selling these bizarre nightclothes?
After talking with six experts in advertising, retail, and ecommerce, I was able to mostly solve the case of the butt-flap pajama ad. The butt-flap PJs managed to take over the internet through a combination of wonky brand safety measures, a few marketing strategies including provocative sexual imagery, and a good amount of luck.
"It may just be a happy accident for them, or it may be part of some sort of a strategy - one doesn't know," Greg Sterling, the vice president of Insights at online marketing company Uberall, said. "But, it's pretty hard to engineer a viral ad."
Here are the answers to the biggest questions raised by these absurd ass-less PJs.
How did this ad takeover Elle's bombshell Shkreli story?
The first thing I tried to figure out was how this ad ended up in the middle of the Elle article in the first place. With so many people pouring over the article, an unknown fashion brand could not be the only brand trying to advertise, right?
According to the co-founder of Check My Ads Nandini Jammi, brand safety company DoubleVerify had marked the article as "unsafe." This is supposed to keep ads from appearing on offensive content itself. But, Jammi said, these companies often flag articles that simply report on matters that could be offensive. As a result, Jammi theorized, brands that work with brand safety companies had their ads pulled from the article, leaving an opening for IVRose.
"Most of the big brands have effectively forfeited their place on this article," Jammi told me. "That opens up the way for brands or advertisers who have less of a risk threshold. They're okay with their ads being on potentially unsafe sites, because they would rather just get a higher volume out."
"They kind of flood the market, " Jammi added. "When the bigger brands don't want to be on a site, they get the same real estate for a lower cost."
Sterling said that this ad was likely "next in line" after the higher-quality ads were blocked.
"It's not completely the bottom of the barrel, but it is sort of trending toward that," Sterling said.
Greg March, the CEO of the media agency Noble People, said that the Elle article was emblematic of the way online media companies sell ads. Bigger stories create more ad units to sell, with media companies quickly running out of premium buyers for news - leaving just the programmatic low bidders.
"Advertisers allocate their media budgets way before they know what the news is gonna be," March said. "So when a story hits most advertisers aren't set up to say 'I want my ad on that story.'"
So, that solves the question of why the Elle article was filled with ads for butt-flap pajamas instead of major, well-known brands. But, why was it only the pajamas?
This question is also puzzling experts. Typically, it would be strange for every single person to get served the same online ad, as usually such marketing is based on people's past behavior online.
"It is quite unusual as most online ads are based on cookies or tracking so they are targeted," GlobalData managing director Neil Saunders told me in an email.
The vast number of people seeing the ad makes it seem as if there is no targeting in place. However, Dr. Krzysztof Franaszek, founder of ad tracking and targeting company Adalytics, said that is not actually the case.
IVRose uses 18 ad trackers, sets nine third-party cookies, and uses adtech services from companies including TikTok-owner Bytedance, Twitter, Facebook, and Google, Franaszek wrote in an Adalytics blog post on Monday. Franaszek also noted that new Chrome profiles and people who clear all third party cookies do not see the Ivrose onesie ad, even on the Elle website.
"It is therefore likely that Google or some other ad tech company is classifying the elle.com article as being related to Adult content or subjects, and is targeting users who visit articles like this one with adult like content, including the Ivrose ad," Franaszek wrote.
If you saw the IVRose ad, Franaszek told me, you likely did something online that made Google or some other tech company believe you're seeking out "adult" content. It seems to be very broad targeting, Sterling said - but, it is targeting all the same.
The PJ ad seems to have taken over the internet because of a mix of IVRose's broad targeting strategy and the ad itself being more memorable than most.
The butt cheek peeking out of the PJs grabs people's attention. And, with people on Twitter discussing the ad, it is more likely to register the next time you see it.
"The reality is we all [see] the same weird ads all the time but they don't capture our attention like this one - which personifies the issue," according to Conor Ryan, the co-founder of the social media advertising platform StitcherAds. "It's a classic symptom of the spray and pray aspects of display advertising."
There's another reason that Franaszek says that it feels like the PJ ad is everywhere: IVRose's retargeting strategy.
"Ivrose uses remarketing services from Google - if you visit their website, you will drastically increase your chances of seeing one of their ads," Franaszek wrote in the blog post.
Remarketing, also called retargeting, is a popular strategy in online advertising that shows you the same item over and over again, or repeatedly shows you items related to past online behavior. It can be incredibly effective, or incredibly annoying, depending on if you want to actually buy the item.
To sum it all up: the PJ ad seems to be everywhere because it is memorable, and because if you see it once you are more likely to see it again. Still, multiple experts told me, the only way to really know why that butt-flap PJ ad is everywhere is by asking the brand behind the ad.
Who is the mastermind behind the ad?
Unfortunately, IVRose was not willing to reveal its secrets. I reached out to IVRose's Facebook page on Sunday evening, saying I was a writer for Business Insider who wanted to know more about the strategy behind the PJ ads.
I received the response: "sorry, we can't help you."
This was followed by an apparently automated message: "Thank you for your enquiry! We will close the conversation now, you are welcome to contact us again anytime. Bye!"
IVRose appears to be one of a number of nearly identical fast-fashion brands, owned by the same company - Shanghai Jigao Information Technology Co., Ltd., according to the brand's Facebook page. Other brands, such as ChicMe and Joyshoetique, are selling the same clothing items, with the same model, at the same price point.
If you get fast-fashion ads on social media or websites, this probably sounds like a familiar story.
"These are what I would call 'opportunity brands' that have a very short life span," StitcherAds' Ryan said. "They can setup the 'business' in a week and tear it down just as quickly. They are not trying to establish a long term brand. They are trying to rapidly sell low-quality products at really high margins."
According to Saunders, IVRose is likely one of many brands that are backed by a Chinese manufacturer, aiming to cash in on selling directly to consumers.
"Digital advertising plays a key role in drumming up demand as most of these brands are not well known by consumers and have no physical presence," Saunders said.
Are these PJs even real?
Looking at IVRose's site after a day of talking to experts, I was struck by a new question - even if I bought these butt-flap PJs, would they ever arrive?
The wonky wine glass on IVRose's front page made me concerned about just how much PhotoShop was going on. And, as Vice reported on Monday, the photo used to sell the PJs appears to be a slightly altered photo from the website of lingerie brand Yandy.
Saunders told me there is probably nothing fake about IVRose. It is possible that the company shares a supplier with Yandy - or that the site will send a different onesie entirely. BuzzFeed reported in 2016 that it was common for fashion brands with opaque backgrounds to steal pictures online to sell clothing that frequently failed to live up to expectations.
"Consumers should be conscious that the products may not be of the best quality and that making returns may be difficult," Saunders said.
However, after 24 hours of obsessing over this butt-flap PJ, that was a risk I was willing to take. Reviewers on IVRose's website seem to be enjoying the onesies that they purchased, with 336 reviewers giving it a four-and-a-half star rating.
I decided that the only way I would really know what was up with the ass-less pajamas was if I purchased them myself. So, I ordered a pair of medium pajamas. And, I'm not the only one - one of my colleagues asked if I could order her a pair as well, and Jammi told me she was also eyeing the price of the PJs.
"It feels like whoever's running their marketing is a secret genius to me," Jammi said.
Patrick Coffee contributed reporting to this article.
December 13, 2020Kate TaylorUncategorizedComments Off on Fast-food chains are vultures feasting on the carcasses of independent restaurants. But, the American government killed those mom-and-pop businesses in the first place.
The death of independent American restaurants during the pandemic chains like McDonald's and Starbucks a natural villain.
Analysts say that fast food chains will likely benefit from the $39 billion in sales linked to tens of thousands of restaurants closing across the US.
But, the federal government is to blame for its failure to save these restaurants — not fast-food chains.
This is an opinion column. The thoughts expressed are those of the author.
It's a stark comparison. For a second, it seems like Marsden will blame the movie company. Surely, these organizations can afford to shut down filming, at a time when many restaurants cannot. Instead, she turns her attention to Los Angeles Mayor Eric Garcetti and California Gov. Gavin Newsom.
"They have not given us money, and they've shut us down," Marsden said in the video. "We cannot survive. My staff cannot survive."
In the face of what is essentially an apocalyptic event for the restaurant industry, it is natural to look at survivors with envy - and rage. The fact that the restaurants most likely to survive are massive chains like McDonald's and Dunkin' helps fuel this fire, as do the multi-million dollar paychecks handed out to the executives in charge of these giants.
But, ultimately, Marsden is right. The blame for the death of independent restaurants doesn't lie with film studios or fast-food chains. It rests squarely in the hands of the politicians and the governments.
It's natural to hate fast food when your favorite restaurant has closed up shop
"I can't help but resent these brands and their hold over our lives when all I want - and what I really need - is to sit with my friends in our favorite dark bar while drinking Tecates, sharing a basket of matchstick fries, and joking around with a bartender we've come to know and love through years of being a regular," Madeleine Davies wrote in Eater this week, on KFC's latest viral marketing campaign.
"If that were safe and possible, maybe then I could lighten up," Davies continued. "Only none of us can do that because our favorite dark bars are disappearing; chains, with their sense-dulling monotony and corny viral marketing campaigns, could be all that remains."
Davies' concerns about chains taking over America are reasonable. Analysts have said that the closures of independent restaurants will fuel the growth of chains in the coming years. For example, investment firm Cowen estimates that independent restaurant closures this year and next will mean there will be $39 billion up for grabs through 2022. According to Cowen analyst Andrew Charles, Chipotle, Domino's, Starbucks and Wingstop are among the chains best positioned to cash in on hundreds of thousands of mom-and-pop shops dying out.
But, the chains themselves are not to blame.
A new report from The Counter this week found that fast-food franchisees amassed more than $1 billion in federal aid through the Paycheck Protection Program (PPP). The Counter raises some important questions about PPP loans, including if a second stimulus package will again be disproportionately funneled to organizations - like franchisees - with greater preexisting financial support.
At the same time, it is not a bad thing that franchisees received government funds.
Many franchisees truly did need assistance during the pandemic, with restaurants closing and operators declaring bankruptcy. While most chains - especially in fast food - have seen sales recover, their survival was far less certain in the early days of the pandemic.
"Every franchisee is a small business, and they had to close up, and they're sucking wind," restaurant industry investor Roger Lipton told Business Insider in May. "They're hemorrhaging."
Essentially, PPP loans did what they were supposed to do for fast-food franchisees - organizations with solid financial support and an easily activated take-out business. But, as seen by widespread closures, they failed independent restaurants. You can be skeptical of fast-food chains' lobbying efforts, but at the end of the day, the government is to blame for this failure.
"Unless the restaurant industry receives a financial bailout, we may be looking at the permanent closure of about 85% of independent restaurants, resulting in approximately 16 million people across the country losing their jobs," California chef Brooke Williamson wrote in an Los Angeles Times opinion piece in early December.
State and city governments have said they lack the funds to bail out restaurants. So, the responsibility lies squarely in the hands of the federal government - which, after months of negotiations, still has failed to pass a second stimulus package.
Even the villains of the anti-chain narrative say the government is failing independent restaurants. McDonald's and Starbucks CEOs have urged Congress to take action in passing another stimulus package, specifically calling out the struggles of small businesses.
"We need Congress to take action," Starbucks CEO Kevin Johnson said at Starbucks' investor day on Wednesday.
"This is not a competition," Johnson added. "We are grounded in humanity."
Of course, there are reasons to criticize massive companies, from the gap in salaries between CEOs and restaurant workers to failure to address persistent sexual harassment problems. A future of American dominated by chains is a grim vision of the future, and one that becomes more likely every day the federal government fails to provide further aid.
Fast-food chains may be vultures, feasting on the carcasses of beloved mom-and-pops. But, they didn't truly kill those businesses in the first place. The true culprit in their demise is the failure of the federal government.
Starbucks is aiming for a $15 minimum wage, as the coffee giant makes a major investment in worker pay.
CEO Kevin Johnson told The Wall Street Journal that, over the next three years, he wants to raise wages for all US store workers to at least $15 per hour.
Starbucks is in the process of giving all employees at least 10% raises, with pay hikes rolling out across the US by Dec. 14. In an internal memo viewed by Business Insider, Rossann Williams, the president of Starbucks' company-owned US stores, said that the company is "making one of the most substantial investments in pay in our company's history."
"If we're labeled as essential workers, we should get paid essential," Jay Josef, who has worked at Starbucks for nine years, told Business Insider. "That's why [we want] a $15 minimum wage increase."
Higher pay is an expensive proposition for Starbucks. Stifel analyst Chris O'Cull said in an October report that Starbucks, along with Chipotle and Shake Shack, are among the three restaurant stocks that would be most impacted if a federal $15 minimum wage were to pass.
Unlike many major chains, Starbucks is not franchised. As a result, higher wages directly impact the company's bottom line. Roughly half of the chain's US locations, or 9,600 stores, are owned by the company.
"If you have been let go and don't have income, you really need help," McMillon continued. "The voice we have at Walmart is to say to Congress and the administration we need you to help those people who need help."
"The slow negotiations over COVID-19 relief have in recent days boiled down to two major sticking points: the scale of funding to state and local governments, and protections for businesses from litigation by employees who get the virus," reports Insider's Mia Jankowicz.
Experts say Starbucks will cash in on the closures of independent coffee shops
Starbucks sales declined during the pandemic, with comparable sales down 9% in the US in the fourth quarter.
However, analysts say that Starbucks is likely to win over customers with the closures of independent coffee shops, as roughly 110,000 restaurants have already closed across the US. On Tuesday, Cowen analyst Andrew Charles named Starbucks as one of his four favorite stocks best suited to capitalize on the $39 billion in restaurant sales that are "up for grabs due to the closure of independents."
Johnson said on Wednesday that a stimulus package is necessary to prevent closures of small businesses. Starbucks does not want these independent coffee shops to close, Johnson said.
"This is not a competition," Johnson said. "We are grounded in humanity."
Starbucks executives expressed optimism about the future of the company, announcing Starbucks expects outsized non-GAAP earnings per share growth of at least 20% in fiscal year 2022. Starbucks updated its fiscal year 2023 and 2024 expectations for ongoing annual non-GAAP EPS growth rate to a range of 10% to 12%, up from at least 10%.
In 2020, McDonald's gave up pretending to be healthy.
The McWrap disappeared back in 2016. Then, in late March, McDonald's announced it was slashing less popular menu items, including salads, grilled chicken, and yogurt. The change was supposed to be a temporary move during the pandemic, but nine months later the "healthy" items have not returned.
"I'm trying hard to lose weight and there are days we have a busy schedule where take out is a must," Rachel Fleck, a mother of four from Tiffin, Ohio, told Business Insider. "There is no form of chicken unless it's battered and fried and no salads."
Fleck said she has been going to McDonald's less frequently since the healthy menu items have disappeared, instead visiting Subway or Wendy's.
However, Fleck seems to be in the minority. McDonald's same-store sales increased 4.6% in the most recent quarter, as analysts celebrate the chain's success.
The reason McDonald's nixed its "healthy" menu items is pretty straightforward: They were just never all that popular.
McDonald's added salads to the menu in the late '80s, after rivals like Wendy's and Burger King were already serving the menu item. Salads and other healthy options typically serve as a counter to the "veto vote," or an option for people - like Fleck - who would otherwise block a trip to McDonald's if they couldn't order a vegetarian or more nutritious meal.
But, salads have never been top sellers or as profitable as other menu items. To make matters worse, preparing salads slows down workers, making drive-thru wait times longer - a huge problem during the pandemic, as the drive-thru now makes up the vast majority of McDonald's business.
"McDonald's is a business with one primary goal: to generate profits for shareholders," Marion Nestle, a professor of food policy and nutrition at New York University, told Business Insider. "It is not interested in producing foods that do not sell or bring people into outlets."
"Keeping our menus simplified is your NOA's No. 1 priority," an independent group of McDonald's franchisees called the National Owners Association wrote in an internal memo viewed by Business Insider in June.
Health priorities have shifted in recent years
Even before the pandemic, the restaurant industry has been shifting its focus away from calorie counts and towards topics such as quality and "clean eating."
In recent years, McDonald's press releases have focused more on food sourcing, cutting artificial ingredients, and antibiotic-free meat than nutritional information such as calories, fat, and sodium.
"We are helping to create a future of quality and secure food sourced in a responsible way, because how our food is produced and where it comes from matter to our customers, communities and the environment," CEO Chris Kempczinski wrote in the company's 2020 Purpose & Impact Summary Report.
Nutrition is still key when it comes to McDonald's Happy Meal. Fruit, vegetables, and low-fat dairy remain a major focus, with McDonald's continuing to revamp options to be even healthier. Even when salads disappeared, McDonald's kept apple slices on the menu for the kids' meals.
"I don't care whether McDonald's has healthy options or not (except for kids meals which I think should be healthy by default)," public health expert Nestle said.
Instead, Nestle said that if people are worried about public health in 2020, they should focus on universal basic income, universal health care, universal school meals, price supports for fruits and vegetables - not McDonald's salads.
The salads will come back, and a new era of fast-food nutrition will begin
Just because the restaurant industry is more focused on "clean food" right now does not mean that traditionally healthy options will never return to McDonald's.
"We're not always going to be in a period where the the dining room is locked up," said John Gordon, a restaurant analyst with Pacific Management Consulting Group.
When McDonald's is less focused on drive-thru, it will need to rebuild its dining room business - which requires salads and other healthy options, and make speed less important. If McDonald's doesn't reintroduce healthy menu items, Gordon said, it will end up losing business to rivals. Ultimately, a speedy drive-thru cannot serve as a replacement for nutritious menu items.
"We will eventually be through this era. We will live our way through it," Gordon said. "At that point in time, salads will be appropriate."
McDonald's declined to comment on if its salads and other healthy menu items would return to menus. However, the company seemed to hint that menu items could return in a new form, saying that McDonald's is still actively exploring opportunities to bring back missing menu items in new ways.
"With customers at the center of everything we do, we'll continue listening to them and evolving our menu to meet their needs," McDonald's said.
December 4, 2020Kate TaylorUncategorizedComments Off on McDonald’s franchisees say Happy Meal prices will almost certainly increase in 2021, as the fast-food giant kills a subsidy that has been around for decades
McDonald's will no longer send franchisees the $300 a month subsidy that was intended to keep Happy Meal costs lower.
As a result, franchisees told Business Insider that Happy Meal prices will likely rise in 2021.
"COVID is surging, and they're worried about taking our Happy Meal subsidy?" a franchisee told Business Insider. "It's not something that families in America want. They want a value-priced Happy Meal."
McDonald's told Business Insider that franchisees have control over menu prices, and that it plans to financially support operators in other ways in 2021.
McDonald's Happy Meal prices are likely to rise in 2021, as the fast-food giant ends a long-running subsidy.
On Thursday, McDonald's officially announced internally that it was ending its roughly $300 per month Happy Meal subsidy, which has been around for decades. The subsidy, which added up to roughly $3,600 a year, will officially end on January 1, 2021.
"We recognize this subsidy has been in place for many years," the company said in an internal memo viewed by Business Insider. "However, it is no longer fueling growth in the way it once was."
The change, along with other adjustments that will result in franchisees paying more in 2021, infuriated the operators that own roughly 95% of the McDonald's locations in the US. According to franchisees who spoke with Business Insider, the change will almost certainly result in more expensive Happy Meals.
"COVID is surging, and they're worried about taking our Happy Meal subsidy?" a franchisee told Business Insider. "It's not something that families in America want. They want a value-priced Happy Meal."
"I'm not going to eat" the cost of keep Happy Meal prices the same without a subsidy, another franchisee said. "If McDonald's doesn't want to eat it, why would I?"
When asked for comment, McDonald's told Business Insider that franchisees are in charge of setting prices for menu items. McDonald's only controls the prices at 5% of its locations that are owned by the company in the US; 95% of locations are owned and operated by independent franchisees.
The changes are sparking a battle within McDonald's
The internal changes that were officially announced on Thursday have reignited tensions within McDonald's.
"It is the proverbial straw that broke the camel's back," said a former McDonald's executive, who continues to work with franchisees and was on a call with more than 100 operators about the changes on Thursday. "At McDonald's, we call it - the ketchup has hit the fan."
Recently, McDonald's franchisees and corporate leadership have been publicly unified. While other restaurants in the US have struggled during COVID, McDonald's has thrived, with US same-stores sales up 4.6% in the third quarter. Kalinowski Equity Research's most recent quarterly survey, released in October, found that McDonald's franchisees' optimism about the business was the highest it had been in years.
However, there has been bad blood between franchisees and corporate leadership at McDonald's in recent years.
Franchisees founded their first independent organization, called the National Owners Association, in 2018 to push back against what they saw as corporate indifference to franchisees' interests. More recently, franchisees and corporate leadership clashed over the best way to deal with sales plummeting amid the pandemic in early April.
McDonald's emphasized that it plans to invest in franchisees in other ways going forward. In Thursday's memo, the company said it is looking at options "such as making bold moves to support our restaurant employees."
While it is killing the Happy Meal subsidy, McDonald's has made a number of financial investments to support franchisees in 2020, including a $100 million marketing investment. One such subsidy was related to the Travis Scott meal, which made the celebrity promotion more profitable for franchisees while keeping menu prices low.
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McDonald's McRib returns to menus across the US on Wednesday, December 2.
The fast-food giant confirmed to Business Insider that the sandwich would be rolling out nationally for the first time since 2012. In the past, the McRib has returned to some, but not all, locations across the US for a limited time every year — sparking confusion and frustration from McRib fans in areas where the item was not on the menu.
"They kept hyping it up more and more and just teasing the McRib lovers with something they'd never get," Matt — a McRib superfan who created the site McRibGate — told Business Insider.
Matt is part of a community of McRib lovers who came together to demand a wider rollout of the sandwich and strategize how to find the fast-food icon. Many have been forced to use the McRib Locator, a website created by Alan Klein to track the elusive sandwich.
"In a year as challenging as this year has been, to throw a little McRib out there to those that really want to have it, it feels like something that would be a pretty nice gesture," Klein said of the sandwich's 2020 return.
McDonald's has been hyping the return of the McRib on social media in recent weeks.
On Monday, the company announced plans to give away 10,000 sandwiches as part of a collaboration with No-Shave November. The first 10,000 people to post a clean-shaven — or simply beard-free — face with the hashtag #Shave4McRibSweepstakes and a @mcdonalds tag on Twitter or Instagram will get a free sandwich.