Episodes
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Our guest is Kathryn Borel, a television writer and the romantic partner of co-Host Mike Merrill. Chris and Zach go deep with Kathryn about what led Mike to start working at a hamburger restaurant and the impact of that on their relationship.
McTrot Is Just About To Happen!
Mike comes back to join Chris in the final interrogation of Zach who is in the final hours of preparation before his annual trek to visit all the McDonald’s in Manhattan on foot within 24 hours.
He seems calm and confident. Is he posturing? Is he hyping himself up? How confident is he that he will set a record?
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Today at Hamburger Business Review we keep talking about politics and burgers, the McTrot, more from inside the hamburger restaurant, and a new case study about what McDonald’s had to do in order to make it work in India.
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Episodes manquant?
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Hello Hamburger Friends,
Today we’re talking about the tactical use of prices and deals and looking at how much value you can squeeze out of a value meal (or how much value they can squeeze out of you).
Our case study is about a flawed 55 cent promotion that over promised and underdelivered, upsetting both customers and franchise operators.
The Price of the Hamburger is Too Damn High
The cost of ground beef has risen sharply from the mid-80’s. In 1984 it was just $1.29 per pound and today is $5.59.
Sens. Elizabeth Warren, Bob Casey, and Ron Wyden sent a sternly worded email to McDonald’s President and CEO Chris Kempczinski demanding to understand how a company could dare increase prices more than inflation (which they also shared with the press of course).
McDonald’s released a statement saying this letter from the senators:
“demonstrates a lack of understanding of our franchise business model and contains contortions of facts and many inaccuracies.”
What is a Modern Hamburger Restaurant To Do?
As consumers and politicians (and even the companies themselves) grow more concerned with increasing prices (let’s ignore that pesky income disparity issue, right?) we have entered a new era in the hamburger business…
The Discount Wars
In recent weeks, McDonald’s, Burger King and Wendy’s announced new value meals, while Target, Walmart, Walgreens and Amazon Fresh said they would cut prices on thousands of items.
So McDonald’s isn’t just fighting other fast food brands, or even other restaurants, but companies like Target, Amazon Fresh, and local grocery stores. Uber Eats and DoorDash present every local food option, meaning a price conscious consumer has a lot of choices.
Case Study: McDonald’s 55 Cent Promotion
All of this leads into our case study, which comes from Dr. David Robinson and the University of Berkeley’s Haas School of Business.
The problem: By 1997, McDonald’s was facing an unsettling challenge: slowing sales growth and intense competition. The fast-food giant unveiled an ambitious and nostalgic strategy—“Campaign 55.” The plan was that each month, a signature burger would be spotlighted at the throwback price of just $0.55, a nod to the year McDonald’s was founded. The campaign launched with the iconic Big Mac.
Faced with customer and franchise owner anger, McDonald’s corporate abruptly pulled the plug on the campaign that was supposed to last the entire year. We go into more detail on the podcast and discuss how these price reduction strategies can backfire.
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Welcome Hamburger Enthusiasts!
Chick-fil-A has launched “Chick-fil-A Play” and it's... popular?
The cow mascots are here, and the app lets you “watch, play, create, listen, and read” and will occupy your kids so you can enjoy your Honey Pepper Pimento Sandwich.
This is a free app. The only monetization strategy is hoping you to buy a chicken sandwich.
The End of the McBroken Era?
Thanks to the work of Public Knowledge and iFixit the US Copyright Office has partially granted an exemption to the DMCA which will allow people to circumvent digital locks in order to repair commercial and industrial equipment.
What this means is that individual owner/operators of a franchise can now legally attempt to repair their own machines!
The E. coli Story Continues
Not counting the costs of the lawsuits that have started, it’s now being reported that McDonald’s is investing $100 million to bring customers back, with $65 million going to support owners who lost business and $35 million into marketing efforts.
My Hamburger Restaurant
Mike says he is pretty good at drive thru now, and he gets complimented on his radio voice pretty often. The multi-tasking is next level and the tasks never end, but the system is pretty well designed.
Introduction to McTrot
Zach is prepping for his 3rd annual McTrot, which he explains as a “challenge to eat at every McDonald’s in Manhattan within 24 hours, entirely on foot.” It’s an absolutely insane, and seemingly impossible task.
Case Study
This week’s case study is McDonald’s China: The Expired Meat Scandal that takes us back to 2014 when a Shanghai broadcaster secretly filmed inside the food processing plant of Shanghai Husi Food, a subsidiary of U.S.-based food supply giant OSI Group.
Obviously this case study made us think a lot about the E. coli situation McDonald’s is currently navigating (though is mostly out of the news now) with a slight dip in the share price. Mike remains bullish, but we don’t make recommendations and in fact recommend not choosing individual stocks.
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Season 2! Here we go...
We tricked producer Chris Higgins into helping us!
We have some News, we have Mike's stories of Working at a Hamburger Restaurant, and of course we have our Case Study Review.
🧅As we readied this episode the news broke of E. coli cases related to the Quarter Pounder! We dive in and will continue to explore what this means.
🍔 Probably the biggest change to this season of HBR is that Mike is now working at a hamburger restaurant in southern California. Producer Chris Higgins asks Mike about why he chose this.
🤓 And then we have the Case Study! This first week we're digging into McDonald's Corp.: Managing a Sustainable Supply Chain by Ray A. Goldberg and Jessica Droste Yagan.Both Zach and Mike agree that this is one of the best case studies they have ever read!
The case study is a Shakespearean story of two warring brands — McDonald’s and Greenpeace — and how they came together to fight the clearcutting of the Amazon rainforest. While the focus of the piece is on McDonald’s and its willingness to work with Greenpeace, we were far more fascinated by the complexity of the supply chain logistics required to run a global operation like McDonald’s.For more subscribe at https://www.hamburgerbusinessreview.com
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Politics and McDonald’s
There is a delightful amount of “Elect Mayor McCheese” fan created imagery, which is a wonderful escape from the brutal reality of the US Presidential Election. But never before has McDonald’s played such a role in politics, and so today we explore some context about what the heck is happening.
Why Are We Covering Politics?!
Donald Trump is purportedly scheduled to work the fry station at McDonald’s in Philadelphia on Saturday, October 19th.
Trump can’t stop obsessing over Harris’s McDonald’s job. So now he’s off to work the fryer at the fast food joint.
We think this is perhaps more than just a publicity stunt and the subtext here is nothing less than the essential difference between Donald Trump and Kamala Harris.
Kamala Harris & McDonald’s
In November of 2012 the New York Times reported, With Day of Protests, Fast-Food Workers Seek More Pay:
The biggest wave of job actions in the history of America’s fast-food industry began at 6:30 a.m. on Thursday at a McDonald’s at Madison Avenue and 40th Street, with several dozen protesters chanting: “Hey, hey, what do you say? We demand fair pay.”
The unionization drive, called Fast Food Forward, is sponsored by community and civil rights groups — including New York Communities for Change, United NY.org and the Black Institute — as well as the Service Employees International Union. The campaign has deployed 40 organizers since January to rally fast-food workers behind unionization, saying the goal is to raise wages to $15 an hour.
This long running battle for fair pay for fast food workers is a big issue for Kamala Harris, and it puts her ideologically opposed to Donald Trump. Here is a Fight For Fifteen video with Harris posted on Facebook:
Trump’s Beef
Initially it might seem Donald Trump is just jealous. We know he loves McDonald’s and maybe he is mad that Kamala Harris gets to “claim” his favorite restaurant. But his response is so weird. It’s both predictable and also uniquely Trump:
He claims she didn’t work at McDonald’s.
Like with Obama’s birth certificate, he demands to see records that prove she worked there. This is an unhinged way to attack a political opponent.
Presidential Politics and McDonald’s
There is a history of Presidents and hopefuls showing up at McDonald’s to seem more like a “man of the people.” Some, like Bill Clinton, really liked McDonald’s. There is a famous SNL skit about it (possibly based on this Clinton and Gore C-SPAN video).
But McDonald’s has been used as a symbol of the people by many politicians. Ronald Reagan campaigned at a McDonald’s…
And Mitt Romney tried to win over some positive press coverage by handing out fries to reporters.
It's an amazing aspect of our democracy that the most powerful person would eat, and occasionally relish, a food that is so pervasive and maligned just to seem like a normal guy. (Seems easy enough but it can backfire and make you seem weird.)
McDonald’s is like what Andy Warhol said about Coca-Cola:
What's great about this country is America started the tradition where the richest consumers buy essentially the same things as the poorest. You can be watching TV and see Coca-Cola, and you can know that the President drinks Coke, Liz Taylor drinks Coke, and just think, you can drink Coke, too. A Coke is a Coke and no amount of money can get you a better Coke than the one the bum on the corner is drinking. All the Cokes are the same and all the Cokes are good. ― Andy Warhol
Trump & McDonald’s
Where Harris comes at McDonald’s from the angle of the labor, Trump comes at McDonald’s as a customer.
Like with Clinton, we know that Trump honestly loves to eat McDonald’s. The most iconic image of Trump is him with fist raised in the air and blood on his face. But the other for me is from the White House dinner when the government was defunded, and he assembled a feast of fast food. He just looks so pleased with himself.
On an episode of Election Profit Makers they theorized that this election is barely a fight between the two candidates because Trump talks to his side and Harris talks to hers and other than one debate, they don’t really interact. This limited interaction gives the McDonald’s argument more weight, even though it is wildly stupid.
Why Is Trump Working at McDonald’s?
On the surface he seems to be implying that Harris never worked at McDonald’s because working there is easy, and she said it was hard. But the subtext here is that he’s saying McDonald’s is an easy and small job, one that does not deserve higher pay or benefits.
He also figures that if he can cross the counter from customer to employee he can negate the labor power of Harris’ punch. He is a self-professed “counter-puncher” and if he can undermine Harris edge out a little more media attention then that is a victory.
His measuring stick is attention, and people love talking about him working at the fry station.
Predictions
Zach: Yes, he will work at the fry station. No, it will not give him the election.
Mike: He will not “work” the fry station. He may be photographed standing near it. He may touch parts of it, but he won’t be working. And I agree, it won’t change anyone’s mind or vote.
New HBR Crew Member
We are also incredibly excited to announce that the Hamburger Business Review team is expanding. We’re bringing on the talented and experienced Chris Higgins as our producer for the second season (which will be the next episode you hear!).
What Chris lacks in McDonald’s knowledge he makes up for with his technical audio skills and storytelling acumen. You might know Chris from his documentary series Best of Five: The Classic Tetris Champions, as writer/host of the Election Ride Home Podcast, from his writing for Mental Floss, or maybe his report for This American Life.
For Fun
This short film captured in a single aerial shot, shows a young man’s proposal to his girlfriend at a McDonald's drive-thru is interrupted by an eager customer offering help with their order. We don’t’ often recommend experimental shorts, but when we do, they are about McDonald’s.
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Does McDonalds even celebrate the holidays? They did come out with a “holiday pie” but it doesn’t seem very festive. Back in 2000 they seemed to love Santa…
Retail sales are expected to be up this holiday season, with bars and restaurants leading the way, so you’d think McDonalds would be leaning into the holiday cheer. But maybe when you are so dominant in the IEO space you don't need to flaunt it?
What’s IEO? They kept saying it at the Investor Day presentation and I had to look it up. It’s the McDonald’s segment of the restaurant industry and it stands for “Informal Eating Out.” This includes other Quick Service Restaurants (QSR), casual dining full-service restaurants, street stalls, specialist coffee shops, and juice or smoothing bars. Basically any place that makes your neighborhood nice is the enemy of McDonalds.
Rather than discuss the doom and gloom of McDonalds ongoing battle for third spaces we have our Holiday Special for you. It’s been about four months since we wrapped season one and we have a lot to cover:
* Zach’s annual McTrot!
* McDonalds position in the Israel/Palestine conflict
* CosMc’s
* The $MCD stock price
* Where is Santa?
* Expanding McDonald’s IP
* HBR Merch!
* And what’s could be next for HBR
🍔 Hamburger Business Review Merchandise
There is no way you’re getting any of these before Christmas, but that’s the point. These are not christmas gifts. This is something you buy for yourself. Because after listening to Season One you’re also a Hamburger Expert!
There is nothing like a fleece vest and a matching cap to make you feel like some combo of tech industry titan and delivery person. It’s great.
The HBR Hat in Mustard
An embroidered hat with with HBR logo. Discreet, because maybe people will think this is associated with a fancy college, but also a signal to all business burger enthusiasts with the burger icon.
The HBR Mug in Mustard
Add a splash of burger business to your morning coffee or tea ritual! These ceramic mugs not only have a beautiful burger design and bold HAMBURGER BUSINESS REVIEW on them, but also a bright yellow rim, handle, and inside, so the mug helps keep your focus on the business of burgers.
The HBR Fleece Vest
Make the right choice with this Columbia fleece vest! It’s a modern yet classic piece that’s perfect for layering during cold weather and you’re ready for your business conference in Switzerland, Idaho, or the Bay Area!
Thanks again to all our listeners and supporters. We’re excited about the future of the burger business and can’t wait to get back to it.
-K. Mike Merrill + Zach Rose
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Grinding It Out is the title of Ray Kroc’s 1977 autobiography and also an aspect of the personality that is needed to run the vast and massively powerful McDonald’s Corporation. Throughout the ten episodes of Hamburger Business Review we’ve taken to referring to the CEO as sitting on the Golden Throne.
"When you play the game of thrones, you win or you die. There is no middle ground." -Cersei Lannister
There have only been 10 CEOs of McDonald’s:
* Ray Kroc: 1961 to 1973
* Fred Turner 1973: to 1989
* Michael Quinlan: 1989 to 1998
* Jack Greenberg: 1998 to 2002
* Jim Cantalupo: 2002 to 2004
* Charles Bell: 2004 to 2005
* Jim Skinner: 2005 to 2012
* Don Thompson: 2012 to 2015
* Steve Easterbrook: 2015 to 2019
* Chris Kempczinski: 2019 to Present
Chris Kempczinski took the “Golden Throne” and became CEO of McDonald’s after the sudden departure of his mentor and boss due to an inappropriate workplace romance, and he’s the first CEO of the modern social media era with his Instagram account @chrisk_mcd.
We’re looking at the 2019 case study titled simply “McDonald’s Corporation” that looks at the situation when Chris took over. He has taken the “Easterbrook Inititives” and developed that into a wonderful “Accelerating The Arches” strategic plan.
We also use this as an opportunity to look back over our first season of Hamburger Business Review and take some educated guesses about what we might see happen next.
Thanks for listening! We hope you learned about more than just the burger business during season one. There really is very little in our modern day culture that doesn’t touch McDonald’s and it’s been an absolute joy to share these case studies and discussions with you.
In Grimace We Trust,-Mike & Zach
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We’re discussing a strangely topical case study from 2013 called McDonald's Twitter Campaign: Hype Versus Reality, which is about how mean social media is.
It starts with a promoted "#MeetTheFarmers" hashtag designed to introduce the wholesome sourcing of McDonald’s. Something like this:
To boost “engagement” they switched from from #MeetTheFarmers to #McDStories halfway through the first day of the campaign, hoping to get regular customers to say wonderful things. Of course, that isn’t how Twitter has ever worked…
The new hashtag got people’s attention! McDonald’s quickly pivoted back to the original #MeetTheFarmers as more people piled on their #McDStories.
A few days later, the media picked up the story and ran negative coverage with mocking headlines. In the articles they were able to highlight McDonald’s blunder and quote the negative tweets. This coverage turned the minor misstep into a major mistake.
Following along with the case study we discuss what happened, and what we can all learn from McDonald’s mistake and the evolution of how brands use social media.
Note: This episode mentions the Grimace takeover of McDonald’s Twitter but was recorded before the reaction videos of the Grimace shake became a trend.
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I’ve been waiting for this case study all season, and it’s such a weird business attempt that there are two case studies about the Golden Arch Hotel, an attempted McDonald’s hotel franchise.
In 2001 the CEO of McDonald’s in Switzerland got the green light to apply the franchise DNA of McDonald’s to a hotel. As a frequent business traveller Urs Hammer thought of everything, and used his deep understanding of scalable efficient service to design a hotel like no other.
It’s not really a spoiler to say that it failed. But it failed in a pretty interesting way, and in fact the hotel itself continues to operate under a different brand. The URL goldenarchhotel.com now redirects to the rebranded Radisson, with the super sized McDonald’s still attached to the structure.
The infamous exposed showers are still there, now covered with scenes from around Switzerland to provide a little more privacy.
Join us as we imagine what it was like to pull into the not-so-grand Golden Arch Hotel and chat with our fellow confused travelers over a beer some chicken nuggets at the hotel bar.
Your Hosts,K. Mike Merrill and Zach Rose
Case Studies:
* McDonald's and the Hotel Industry
* Golden Arch Hotel: McDonald's Adventure in the Hotel Industry
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What does artificial intelligence have to do with burgers? As we’re learning at Hamburger Business Review, there is nothing that McDonald’s doesn’t touch, including AI. Following their ambitious Velocity Growth Plan McDonald’s acquired Dynamic Yield in 2019 as part of a strategy to use big data for more personalization. The digitization of McDonald’s has been in the works for years, and is incorporated at every level, from the store and drive-thru remodels to the focus on the app and delivery services.
In this episode we look at the 2020 case study McDonald's: Can A Behemoth Lead in the Era of Artificial Intelligence? by Fabrizio Di Muro of the University of Winnipeg.
Coming Up Next:
Next episode we’re looking at the ill-fated McDonald’s hotel launch. And after that we will review the social media strategy for selling more burgers. For our final episode of the season we’ll take a look at everything Chris Kempczinski inherited as the newly appointed CEO.
Hamburger Business Review is a reader-supported publication. While all content is made free, we couldn’t do this without the support of our listeners.
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Beware the beautiful eyes of Bill Ackman, the CEO and founder of Pershing Square Capital Management. When he gets a crush on a business it usually means he has some bold new plan to make drastic changes in order to achieve drastic profits.
In 2015 the gaze of Ackman was on Wendy’s, which he pressured into selling off the profitable Tim Horton’s chain. Ackman sold his shares at a substantial profit, and then stock price later collapsed.
When he later took on McDonald’s the process wasn’t quite as smooth. Was his idea flawed or was it that McDonald’s is already an efficient and well run company? We dive into this topic of activist investors in the burger space with a special guest, Marcus Estes, who helps provide some larger context to the analysis of the case study McDonald’s, Wendy’s, and Hedge Funds: Hambuger Hedging?
Coming up next:
We will be reading case studies about McDonald’s and AI and the ill-fated attempt by McDonald’s to enter the hospitality industry.
Housekeeping:
This is episode six of ten for the inaugural season of Hamburger Business Review. Your financial support allows us to continue to buy Harvard Business School case studies about the burger industry. Thank you.
Hamburger Business Review is a reader-supported publication. While all content is made free, we couldn’t do this without the support of our listeners.
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The Arch Deluxe was a massive undertaking for McDonald’s. This 1996 case study gives us a history of the company, a look at some attempts at premium burgers, and then drops us into the launch of the Arch Deluxe, what was supposed to be the launch of a new burger platform within McDonald’s targeting a more sophisticated customer.
It may no longer be on the menu, but it was an important moment in the constant evolution of McDonald’s.
In Other Hamburger News:
* The Decline of Fuddruckers… What Happened? on YouTube by Company Man (thanks Douglas for the tip!)
* McDonald’s launches nine-carat gold ring to celebrate King’s coronation
* The new burger king: The push for Wendy’s in Australia
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Today we’re looking at the career of Jan Fields. She almost quit after her first day, but sticking it out paid off in a series of promotions that eventually led her to the executive level. This case study is a battle between the idea of the “McJob” and the culture of McDonald’s that loves the executive storyline as a recruiting tool.
We also look at the current CEO of McDonald’s is a factory clone of the modern day business executive. And stay though to the end as we wrap the recent McDonald’s news!
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If the Egg McMuffin isn’t enough, then how can McDonald’s win breakfast?
In this 2004 case study we look at the launch of the McCafé in Canada as a way to compete against the Canadian’s national loyalty to their maple leafed coffee purveyor Tim Horton’s.
In the end we are stymied by what we consider a bit of an underwhelming case study.
Does anyone associate strongly with McCafé? Like they do with Starbucks or Dunkin’? That seems unlikely, and yet McDonald’s plain coffee has been better than Dunkin’ for years in taste tests. But it’s about more than just plain coffee...
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In August of 1998 the Russian financial crisis threatened to destroy George Cohon's 14 year quest to bring McDonald's to Russia. The country was in a state of emergency with massive inflation and widespread economic disarray.
Join us as we talk about the dramatic story and come up with our own unique solution to the problem presented in this case study.
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This is the pilot episode of Hamburger Business Review that proved the concept of how interesting it can be to talk about Harvard Business Review’s case studies about McDonald’s.
We made the following announcement on March 15th.
Pilot Order: Hamburger Business Review
Experimental Garden Group co-host Mike Merrill and burger innovator Zach Rose are set to co-host and produce a Hamburger Business Review pilot episode in mid to late March of 2023.
Merrill and Rose started to discuss the project after Rose joined the Experimental Garden Group investment club and Merrill later advised Rose on his Thanksgiving Day McTrot quest to patronize every McDonald's in Manhattan on foot. In discussions about how to extend Rose's quest the idea for Hamburger Business Review was developed.
In Hamburger Business Review Merrill and Rose will discuss a Harvard Business Review case study about McDonald's. The latter HBR has over 30 case studies focused on McDonald's ranging from 1980 to 2020. In addition to reviewing the history of these case studies Rose and Merrill will also talk about the current state of McDonald's, especially as it relates to the operations of the chain in Manhattan and Rose's first hand experience with over four dozen of them.
Merrill and Rose are hopeful for a series order after they finish the pilot when Merrill will ask his shareholders to commit him to 8 to 10 episodes with financing coming from supporters and listeners.
We recorded on March 18th and quickly edited the episode before asking the KmikeyM shareholders for a ten episode order. The proposal passed with 74% support!
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