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The First Casualty Of An "Improving" Economy: The Fast Food Dollar Menu, As McDonalds Considers Hiking Prices

Tyler Durden's picture


As the fallacy that an economy is improving if the stock market is higher percolates, accompanied by the all too real surge in input costs (yes, oil really is on the verge of breaking $91 first, and then $100), the margin contraction we have been discussing for over 2 months is becoming increasingly acute: for a good recent example nowhere is it more evident than in the latest Philly Fed reading. Yet what is true for manufactured products, is far more applicable for food products, whose input costs are determined by the daily vagaries of millions of speculators. Which means that as the catch 22 of an "improvement" for some courtesy of 3 year highs in the Nasdaq is perceived by the speculators as an actual improvement for all (which would be the case if stocks were owned uniformly by every layer of society, which is certainly not the case), prices will eventually hit the tipping point where retailers will be forced to start passing on cost increases to consumers. Enter McDonalds whos executives according to AGWeb, were quoted as saying that "menu prices could rise if the economy improves." And since after listening to the endless barrage of brainwashing from the mainstream media, one can't not be left with the impression that the economy is doing anything but improving, conveniently ignoring the fact that the Fed is stimulating it coincidentally via QE2, the next step for the broad part of the US population for whom there is no improvement in anything, which would be the majority of America, is about to get its next whopper (pun intended) of a Bernanke side effect, namely inflation in the most affordable of food product categories: fast food. But since this is not caught by the core CPI, all shall be well, and the Fed will be able to proclaim, without losing any sleep, that inflation is truly contained, when the only thing that is contained is lending to those who most need it.

As for that critical choice of when and how to pass on food costs, here are additional details of the dilemma gripping food retailers, per AG Web:

The big question: When or even whether to pass along those costs. Sure, charging more could help protect profits --- but it could also startle customers already shocked by the economy.Restaurants' choice of strategy in Atlanta and across the country will influence where Americans eat next year, and how much they spend.

Some operators say they plan to raise prices gradually if consumers give them the go-ahead. Others want to hold prices steady and see what their competitors do.

"We're obviously in a very cost-sensitive industry," said Robby Kukler, partner at Atlanta-based Fifth Group Restaurants. The company has seen prices rise for beef, chicken and, especially, butter. But Fifth Group has held prices down on most meals, such as fried chicken at South City Kitchen Vinings, fajitas at El Taco and baked manicotti at La Tavola in Virginia-Highland.

"We know people are sensitive to it," Kukler said. "We just made a conscious effort, because of the times we're in, to hang steady."

For those concerned that the recent resumption in limit up openings in various commodity classes is a worrying development, all we can say is "you are absolutely right to be concerned." Indeed, Bernanke's Gusher of Endless Liquidity gusher (GELTM) is starting to make its way to asset classes far beyond stocks.

Restaurants are not the only companies weighing whether passing along higher prices risks alienating customers. Big food brands such as Dean Foods, Del Monte, Dole and Chiquita Brands are among those at the greatest risk from coming price increases, according to Consumer Edge Research. With agricultural commodities up about 50 percent in the six months leading to November, price increases or smaller profits seem inevitable, according to the Connecticut-based research group.

And herein lies the rub: those very same surging S&P EPS that are supposed to form the bedrock of the number to which some multiple is applied to get a 1,550 year end estimate if one is David Bianco, are about to plunge as profit margins are hit, while fixed costs refuse to be reduced.

Historically, restaurants have not immediately passed on the full extent of cost inflation to their customers, analyst Sara Senatore of Sanford C. Bernstein said. Typically that means meal prices lag for several quarters, squeezing profit margins in the short term.

Profits are defended zealously in the restaurant industry. Profit margins at Wendy's restaurants are 15.4 percent this year and 11.6 percent at Arby's, for example. Coca-Cola's, by contrast, are nearly 30 percent.

What this means specifically is that pretty soon America can kiss the various iterations of the dollar menu goodbye.

Executives at McDonald's said menu prices could rise if the economy improves. The Ohio-based chain has said its commodity costs will increase by only about 2 percent in the fourth quarter.

Cheryl Bachelder, chief executive of Atlanta-based Popeyes Louisiana Kitchen, said she expects costs to rise next year. But with the U.S. unemployment rate at 9.8 percent, she doubts that fast-food companies can raise prices much.

Dallas-based Brinker International Inc., which controls Chili's Grill & Bar and Maggiano's Little Italy, enjoyed better prices for meat, seafood and poultry in the quarter ending Sept. 29. In the current quarter, about 90 percent of Brinker's "food basket" is under contract, meaning costs don't depend on fluctuations in the open market. But much of that protection expires later in 2011. That could put pressure on steak prices.

Executives at Atlanta-based Wendy's/Arby's Group say some Wendy's restaurants will raise prices on selected products this month. The increases will be tailored to places recommended by a software program that crunches data from transactions.

Denver-based Chipotle Mexican Grill is prepared to raise prices if necessary, Chief Financial Officer John Hartung said on a recent conference call. But first it wants to see how customers respond to competitors' price increases.

Elsewhere, fast food price hikes have already taken place.... even with 9.8% unemployment.

Some increases have come already. Some Wendy's franchisees bumped the Junior Bacon Cheeseburger to $1.29 after the company switched to a more expensive type of bacon. "We think it was the right thing to do," Smith said.

Wendy's/Arby's, one of the largest fast-food chains in the country, said its commodity costs are 2 to 3 percent higher this year than in 2009. The first half of 2011 is not expected to bring much relief from high beef and pork costs.

Darden Restaurants Inc., the parent company of Olive Garden, Red Lobster and LongHorn Steakhouse, has raised prices about 2 percent this year. It's important to raise prices steadily and consistently instead of delaying them for years, said Andrew Madsen, Darden's president and chief operating officer. Sudden price increases can shock guests, he said.

And so forth. Those interested in the full story can read it here. The bottom line is obvious. As the surge in the stock market continus to be equated, totally incorrectly, with an improving economy, prices will increase inevitably, immediately nullifying any benefit brought from the recent tax extension, and pushing all profits to commodity goods speculators, while taking away purchasing power from end consumers. Keep in mind this is the Fed's plan, which no longer fights disinflation, but is in the inflation creation business. Luckily, Bernanke is 100% certain he can contain this process. It is then too bad it has already started, and is about to get a whole lot worse.

h/t Dan


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Wed, 12/22/2010 - 17:30 | 824790 tmosley
tmosley's picture

Is this the "first" casualty?  Really, we haven't had any casualties before this?

Damn, I might just jump on the Happy Train with Harry, Robo, and associated fuckfaces!

Sorry, just tired of all these "So it begins" type posts.  It's already started.  We are transitioning from the end of the beginning to the middle of this crisis.  The transition will be complete when the Euro crisis hits the core with defaults.

Wed, 12/22/2010 - 17:31 | 824830 Internet Tough Guy
Internet Tough Guy's picture

Agree. Oil at a 2 year high and dollar menu inflation are signs of the same event.

Wed, 12/22/2010 - 17:41 | 824861 Cheesy Bastard
Cheesy Bastard's picture

1/8th pounder with cheese, anyone?

Wed, 12/22/2010 - 17:58 | 824898 DaveyJones
DaveyJones's picture

as long as the taste doesn't improve

Wed, 12/22/2010 - 18:17 | 824940 downrodeo
downrodeo's picture

"pink slime, soylent green is made of pink slime!"



Wed, 12/22/2010 - 22:03 | 825414 duo
duo's picture

What are the price increases for the 5 basic food groups?



high-fructose corn syrup

textured vegetable protein

partially hydrogenated vegetable oil (can be one of the following: palm, soybean, canola, sunflower)

Wed, 12/22/2010 - 22:15 | 825426 hedgeless_horseman
hedgeless_horseman's picture

Worried about the price or availability of basics and have a woman in your life?  Buy her 2 dozen of these:

Wed, 12/22/2010 - 22:45 | 825447 duo
duo's picture

good luck getting through airport security with one of those.

Wed, 12/22/2010 - 23:43 | 825522 frankoo
frankoo's picture


Thu, 12/23/2010 - 01:22 | 825602 Montgomery Burns
Montgomery Burns's picture

My wife got a chuckle out of that.

Thu, 12/23/2010 - 11:24 | 826065 Armchair Bear
Armchair Bear's picture

thanks! my 10 year old daughter's future career...making saddles for riding the cotton pony...i'll be stocking up on flannel and terrycloth!

Wed, 12/22/2010 - 22:24 | 825430 Salinger
Salinger's picture

you neglected to mention the newly approved additive to french fried potatoes that does not need to be declared


yes everyone's favorite Cancer Drug "Elspar" (or Asparaginase ) will now be added to products such as baked goods and french fries, ostensibly to ward off an heretofore unknown carcinogen, "Acrylamide. (actually Acrylamide has been suspected as a carcinogen for decades)


(since that article was first published the additive has been approved)

Wed, 12/22/2010 - 18:40 | 824994 CPL
CPL's picture

LOL, had to reread that ...

Wed, 12/22/2010 - 18:28 | 824967 cosmictrainwreck
cosmictrainwreck's picture

yeah...just keep it under $4.99

Wed, 12/22/2010 - 18:32 | 824977 theXman
theXman's picture

Just came back from a Malaysian restaurant. Lots of price hikes on the menu over last week. The new prices are all hand-written -- the owner would not wait for the new menus to be printed or could afford it.

Wed, 12/22/2010 - 18:44 | 824985 Red Neck Repugnicant
Red Neck Repugnicant's picture

Oil at a 2 year high and dollar menu inflation are signs of the same event.

@internet tough guy

Obviously (and shamefully) you have no knowledge of categorical propositions or syllogisms, and you certainly have never read Prior Analytics by Aristotle or An Enquiry concerning Human Understanding, by David Hume


To suggest that there is a correlation (signs of the same event) between oil prices and business decisions by Ronald McDonald demonstrates a level of ignorance that is typically reserved for tmosely's posts. 

Before you post such knee buckling nonsense, it is advisable that you familiarize yourself with inductive vs. deductive reasoning.    

To start, find the flaw in this inductive example:

1. I believe most/all increases in commodity prices are the result of inflation. 

2. The price of oil has risen

3. Obviously, the rise in the price of oil is caused by inflation. 


Wed, 12/22/2010 - 18:47 | 825007 Cheesy Bastard
Cheesy Bastard's picture

Yes, that is a logical fallacy, ie the rooster crows then the sun comes up.  The rooster crowing must cause the sun to come up.  Having said that are you suggesting that shipping and feed costs play no role in product pricing at Mcdonalds or elsewhere?

Wed, 12/22/2010 - 18:52 | 825020 Red Neck Repugnicant
Red Neck Repugnicant's picture

are you suggesting that shipping and feed costs play no role in product pricing at Mcdonalds or elsewhere?

No. I never said nor suggested that. 

Wed, 12/22/2010 - 18:58 | 825036 Cheesy Bastard
Cheesy Bastard's picture

To suggest that there is a correlation (signs of the same event) between oil prices and business decisions by Ronald McDonald demonstrates a level of ignorance

Sorry.  I thought I saw it right there.

Wed, 12/22/2010 - 19:16 | 825087 Red Neck Repugnicant
Red Neck Repugnicant's picture

lol.  Nice.  

In general, yes - the price of oil affects all businesses.  That's obvious and well-known. 

Specifically to the point of this discussion though, the recent price of oil and the future of the McDollar menu are NOT correlated, nor are they "signs of the same event."

Even the quote by the executive at McDonald's has nothing to do with inflation or rising cost concerns.  It specifically mentions the prospects of an improving economy.  



Wed, 12/22/2010 - 19:49 | 825178 tmosley
tmosley's picture

I love how you acknowledge that he is right and then claim he is wrong in the same breath.  Doubleplusgood doublethink!

Wed, 12/22/2010 - 20:42 | 825279 Red Neck Repugnicant
Red Neck Repugnicant's picture

Hey tGilligan

What happened to the McDollar menu when oil crossed $100 and went to $147?



Wed, 12/22/2010 - 20:49 | 825299 Al Gorerhythm
Al Gorerhythm's picture




von Mises,


Wed, 12/22/2010 - 20:56 | 825312 akak
akak's picture

What happened to the McDollar menu when oil crossed $100 and went to $147?

I wish I could tell you, but since I am not a McSlob and actually care about my health, and have a weird, atavistic habit of consuming real food, I refuse to patronize the McEmpire and eat McShit.

Wed, 12/22/2010 - 21:50 | 825400 Eally Ucked
Eally Ucked's picture

Just ask McD for changes in recipe over time span of 20 years, maybe you'll find your answers.

Thu, 12/23/2010 - 11:30 | 826074 Armchair Bear
Armchair Bear's picture

double cheeseburger went to $1.19 in my town

Wed, 12/22/2010 - 19:02 | 825053 tmosley
tmosley's picture

I see you skipped the first part of the old saying, and skipped straight to the "baffle them with bullshit" stage.

Why do you bother posting here among us neanderthals?  Why don't you go someplace enlightened, like the Obama forums, or Yahoo finance boards?  They seem more your speed.

Wed, 12/22/2010 - 19:06 | 825059 Sancho Ponzi
Sancho Ponzi's picture

I worked closely with the logistics folks at a food manufacturing company. When fuel prices rose they were forced to stop serving smaller customers which led to route consolidation, layoffs, etc.

Anyone with experience in the food manufacting/food service industry knows how critical fuel prices are to their bottom line. You know that 'reefer' on the front of the trailer that keeps the food refrigerated? Yep, that runs on diesel. Did you know each route can service 20-40 customers a day, and that fuel is one of the highest variable costs to deliver product? Did you know that all of the pickles you eat on your McBurger come from the same source, and had to be transported across the country? 

Wed, 12/22/2010 - 19:29 | 825130 Red Neck Repugnicant
Red Neck Repugnicant's picture

Anyone with experience in the food manufacting/food service industry knows how critical fuel prices are to their bottom line.

No one is debating that, and we certainly don't care where the pickles come from.  

Everyone wants to suggest that inflation (and specifically, Bernanke) is to blame for the rise in anything/everything. If oil goes up, then obviously it's Bernanke's fault, not demand pulls from China.  Right?  Or if McDonald's wants to adjust their McDollar menu, then it must be cost-inflation creeping into the economy.  Right?


Wed, 12/22/2010 - 23:27 | 825146 akak
akak's picture

But why are you going to such lengths to seemingly deny the obvious: that the dollar IS depreciating, and that this IS at least contributing to food price increases, even if the ongoing and never-ending depreciation of our faith-based fiat currency may not be responsible for ALL such increases at all times?

Thu, 12/23/2010 - 06:28 | 825773 EscapeKey
EscapeKey's picture

Why is AmericanPatriot posting his lies on Marketwatch?

Wed, 12/22/2010 - 19:56 | 825194 tmosley
tmosley's picture

I see.  The Chinese are consuming more in the face of massive inflation and stagnant wages.

How can a human being be as stupid as you, yet still manage to operate a computer?   That's right, you're not actually stupid, you just base your worldview 100% on being the opposite of what people you don't like think.  That just makes you LOOK like an utter moron.  Of course, it certainly means you don't think for yourself, and instead let your enemies determine what you should think.

Well, how about this?  I think you should definitely stick around, and you should definitely not castrate yourself, so you can be certain to spread your defective genes to the four winds.

Wed, 12/22/2010 - 20:37 | 825273 Red Neck Repugnicant
Red Neck Repugnicant's picture

The Chinese are consuming more in the face of massive inflation and stagnant wages're being sarcastic? 

For the sake clarity, do you think Chinese demand for oil is affecting oil prices, especially in the past 12 months? 

Wed, 12/22/2010 - 20:46 | 825286 Al Gorerhythm
Al Gorerhythm's picture

Do you think that China's release of $ reserves into the commodity markets is affecting oil (and every other good) prices?


Wed, 12/22/2010 - 23:15 | 825463 Red Neck Repugnicant
Red Neck Repugnicant's picture


Wed, 12/22/2010 - 23:18 | 825485 Rahm
Rahm's picture

You are BY FAR the DUMBEST person on this website.

Wed, 12/22/2010 - 23:28 | 825502 akak
akak's picture

Actually, he probably is not --- but may very well be one of the most disingenuous and antagonistic members of this forum.

Thu, 12/23/2010 - 00:24 | 825558 Rahm
Rahm's picture

Fair enough.  Second DUMBEST on this site ;)

Wed, 12/22/2010 - 21:35 | 825379 tmosley
tmosley's picture

Screw the Chinese, how about the whole world?  Oil use was down 2% between 2008 and 2009, the latest time frame for which data is available (  With everything everywhere continuing to look like shit, there is no reason to think it will do anything else will happen this year.

Wed, 12/22/2010 - 21:42 | 825390 Red Neck Repugnicant
Red Neck Repugnicant's picture

You didn't answer the question, and I suspect it is due to you - once again - having absolutely no idea what you're talking about.  

Secondly, WTF does this mean:

there is no reason to think it will do anything else will happen this year.

Wed, 12/22/2010 - 23:08 | 825474 tmosley
tmosley's picture

China's use of oil and energy in general is going up, but the world price is dictated by world supply and world demand.  World demand is down.

That means the decline in energy use that started last year will continue this year.

You sure do seem to have a lot of trouble understanding what people are saying.

Thu, 12/23/2010 - 06:30 | 825776 EscapeKey
EscapeKey's picture

All BRIC countries experience rapid rise in terms of oil use. I wouldn't automatically assume use is down worldwide.

Wed, 12/22/2010 - 22:02 | 825413 Sean7k
Sean7k's picture


The chinese are consuming more because their currency is buying less and as they see inflation rising- it behooves them to spend it now. 

So, nothing to do tonight? Thought you'd see if you could rile people up? 

Thu, 12/23/2010 - 10:03 | 825909 Monday1929
Monday1929's picture

You mean it all comes from one, big, pickle? :)

Thu, 12/23/2010 - 11:04 | 826029 Red Neck Repugnicant
Red Neck Repugnicant's picture



Wed, 12/22/2010 - 20:53 | 825278 Al Gorerhythm
Al Gorerhythm's picture

Your intellectual capacity based on your insights is breathtaking. 

Thu, 12/23/2010 - 11:40 | 826094 DaveyJones
DaveyJones's picture

read more books

Wed, 12/22/2010 - 22:02 | 825412 duo
duo's picture

What are the price increases for the 5 basic food groups?



high-fructose corn syrup

textured vegetable protein

partially hydrogenated vegetable oil (can be one of the following: palm, soybean, canola, sunflower)

Wed, 12/22/2010 - 17:54 | 824893 Kaiser Sousa
Kaiser Sousa's picture

dont fret...its the Star Wars approach to chronicling a unfolding catastrophe...

Wed, 12/22/2010 - 17:18 | 824792 MonsterZero
MonsterZero's picture

When I was growing up they had $1 double cheeseburgers instead of the $1 MCdoubles today that only have one slice of cheese... oh the good ole days...

Wed, 12/22/2010 - 17:19 | 824795 SpeakerFTD
SpeakerFTD's picture

I am calling a top today.

The S&P will not close above today's close until 2018 at the earliest.

(Odds of successful top tick call?  Very small, but damn I feel good about it.)


Wed, 12/22/2010 - 17:22 | 824799 Dr. No
Dr. No's picture

Not only a top call, but a duration as well.  A+ for content and bluntness.

Wed, 12/22/2010 - 17:56 | 824901 Spaceman Spiff
Spaceman Spiff's picture

I'm going to have to 'Price is right' you...

Tomorrow will be the high that will not be bested until 2019.


(odds of a successful top tick call?   100% cuz I'm down with the Bernank bravado)

Wed, 12/22/2010 - 19:39 | 825157 papaswamp
papaswamp's picture

woooo bold man...bottle of what on this?

Wed, 12/22/2010 - 19:48 | 825177 Spaceman Spiff
Spaceman Spiff's picture


Wed, 12/22/2010 - 20:52 | 825308 Drag Racer
Drag Racer's picture

damn, I'm, short'n that shit... or did I shit my shorts?  mm, not really sure but kool-aid is yummy good

Wed, 12/22/2010 - 17:23 | 824798 Sancho Ponzi
Sancho Ponzi's picture

Patty compression time.

OT: Has anyone checked out the Google Ngram Viewer? You punch in a timeline (I used 1950-2008) and type in two or more phrases separated by commas. It will go through data harvested from millions of books and return the frequency at which those phrases appear.

Some interesting results I got were:






Wed, 12/22/2010 - 17:32 | 824836 Brindle702
Brindle702's picture

Wizard of Oz,federal reserve

Wed, 12/22/2010 - 17:38 | 824853 Brindle702
Brindle702's picture

... found what I was looking for: Mr T,federal reserve

Wed, 12/22/2010 - 17:49 | 824874 Sancho Ponzi
Sancho Ponzi's picture

Some more interesting comparisons:

1900-2008 gold,silver,stocks (nice turning in Y2K)

(same period) cruelty,empathy


Wed, 12/22/2010 - 17:54 | 824892 Brindle702
Brindle702's picture

... agreed ... I was using 1986-2008

Wed, 12/22/2010 - 18:02 | 824920 Sancho Ponzi
Sancho Ponzi's picture

And the most revealing of all:

1980-2008   fucked,screwed (yes we are)

Wed, 12/22/2010 - 17:38 | 824846 scatterbrains
scatterbrains's picture

I tried that with the word "unemployed"  going back to 1700 with 2 smoothing avg. interestingly the graph showed a steady low moderate usage of the word until 1913ish where upon the "unemployed" was written about a lot more, with wild gyrations in it's use. I assume this is a result of the excellent job the fed, since it's charter has done smoothing over bumps

Wed, 12/22/2010 - 19:45 | 825169 Brindle702
Brindle702's picture

"I assume this is a result of the excellent job the fed, since it's charter has done smoothing over bumps."

... that and the USA was mostly agrarian until 1900, me thinks.

Wed, 12/22/2010 - 17:21 | 824800 Sean7k
Sean7k's picture

I like the idea of these prices rising. People have put off buying real food for the cheapness and convenience of fast food, but fast food has a huge health cost that most poor people fail to price in. If this drives people to cook again- it will be of great benefit to the poor and middle class.

The other mention- as money is used at greater rates in necessities, this leaves less for other things: savings, investment, durables, etc. Our economy cannot grow when it is cannibalized by inflation in key product categories. This will cause greater unemployment in better paying jobs. Less revenue for government- especially local and state which cannot afford it. 

Aren't death spirals fun? Fuck you Bankers- I hope you all drop dead this Xmas you parasitic bastards.

Wed, 12/22/2010 - 17:26 | 824820 Internet Tough Guy
Internet Tough Guy's picture

Yes, poor folks may be leaner if they can afford less fast food. They may also be meaner; will they eat the rich?

Wed, 12/22/2010 - 17:28 | 824825 Sean7k
Sean7k's picture

Would you eat something riddled with cancer?

Wed, 12/22/2010 - 17:34 | 824842 Internet Tough Guy
Internet Tough Guy's picture

They don't sell kobe beef on the dollar menu.

Wed, 12/22/2010 - 17:54 | 824895 tmosley
tmosley's picture

That's the silver dollar menu.

"You can get anything but human!"

"What, you want human?"

Wed, 12/22/2010 - 17:40 | 824854 drink or die
drink or die's picture

Depends on how tasty it is.

Wed, 12/22/2010 - 19:00 | 824958 Brindle702
Brindle702's picture

Oh, how right you are!

Jamie Olvier takes the waste bits of a chicken and makes them into chicken nuggets.  This lesson succeeds everywhere except for the USA.

Wed, 12/22/2010 - 19:23 | 825107 Cui Bono
Cui Bono's picture

There's always room for Jello, and Lemmy, lots and lots of Lemmy

Thu, 12/23/2010 - 10:11 | 825923 Monday1929
Monday1929's picture

Jamie seems sensitive to people eating the rich. He junks all such comments.


I look forward to eating "Jamie Burgers"- "A little bit of Jamie in every bite!"

Wed, 12/22/2010 - 17:23 | 824804 willien1derland
willien1derland's picture

Death WHERE IS THY STING? I mean the damn BANKSTERS & K Street Lobbyists get OVERSIZED BONUSES & MY FRIES ARE INCREASING IN PRICE??? - Damn where is that GREAT RECESSION when you need it.....Guess my fat a$$ needs to follow Jared over to Subway for Celery sticks...

Wed, 12/22/2010 - 17:24 | 824806 Mad Max
Mad Max's picture

I've been wondering when all the dollar stores are going to become dollar-twenty-five and dollar-fifty stores.  Soon, I expect.  Maybe then J6P will start waking up.

Wed, 12/22/2010 - 17:29 | 824824 Internet Tough Guy
Internet Tough Guy's picture

In my area the have 'Under 5' stores; items cost less than $5. I doubt that dollar store inflation figures in CPI. Remember, they used to be dime stores.

Wed, 12/22/2010 - 17:40 | 824856 tmosley
tmosley's picture

I recently learned about the Dollar Tree.  They've got some amazing stuff in there for only a dollar.  I wonder how long it will be before they become a Two Dollar Tree?

And here I thought dollars didn't grow on trees.

Wed, 12/22/2010 - 17:56 | 824903 DaveyJones
DaveyJones's picture

They should rename it the dollar weed 

Wed, 12/22/2010 - 17:38 | 824848 spongeBOB
spongeBOB's picture

The Dollar store by me has items priced at $2, $3 and $4 in addition to the $1 items. Looked like the same $1 garbage to me but what do I know.

Wed, 12/22/2010 - 21:06 | 825340 Drag Racer
Drag Racer's picture

Dollar should change their name to Yuan store

Thu, 12/23/2010 - 00:49 | 825580 penisouraus erecti
penisouraus erecti's picture


Wed, 12/22/2010 - 17:23 | 824807 arm50
arm50's picture

QE will solve the nation's weight problem too! Hot damn Ben really is great.

Wed, 12/22/2010 - 17:26 | 824808 hambone
hambone's picture

In the past decade, crude oil has ranged from $18 barrel (Jan '02) to $147 (Jul '08)...since the peak in '08 oil has ranged from $36 (Fed '09) to $90 (now). 

The implication on US consumer discretionary from the low of '09 to now is a reduction of $72B annually.  That isn't to mention collapsing margins.

Funny, seems like the price of crude oil over the last decade looks an awful lot like the Eur/Dol or inverse of the DXY over the same period?  Seems this dollar fluctuation may have more to do with oil price changes than other factors?

Given this fairly obvious relationship, why would BB push to devalue the dollar?  Would seem plain this dollar weakening will result in another oil price spike!  This will more than offset any positive export impacts. Oil price spike would seem likely to create another economic shock.

So why do it?  Who does this price spike serve?

Wed, 12/22/2010 - 17:29 | 824826 Id fight Gandhi
Id fight Gandhi's picture

Nike warned today that cotton prices amongst things are compressing margins and warned. Yet we are told the retail sector is amazing by the channel checkers especially in apparel.

Sure you can get sweat shop labor cheap but not the commodities, so watch out below.

Btw nike is raising prices on shoes. They cost $5-7 dollars on average to produce a pair of shoes.

Wed, 12/22/2010 - 18:38 | 824855 hambone
hambone's picture


how right you are Nike, etc. are facing compression on raw goods.  Cotton, rubber, foams, leather.  All going way up...takes a while to show as much is booked a ways out.

How wrong you are regarding labor China, Vietnam, Indo, Thailand, etc. they are facing 10, 15, even 20% annual labor increases, even larger health care increases being passed on from manufacturers, and manufacturers can't find enough workers to even maintain the production.  These places are facing labor shortages...amazing as it may sound and the last place they want to work is in a shoe or apparel factory.  Boring, repetitive work.  These places are also facing large inflation of food, energy, etc. which are forcing the increase in wages just to stay afloat.

After '08, Nike implemented massive cuts to eliminate multiple layers of upper management, senior employees, and "non-value added" employees (ie, any role that could be outsourced to manufacturers that were previously done by US based emp's was done).  After a decade of massive growth, they'd gotten fat and sloppy.  They re-engineered, re-did everything to maximize profit.  The fat is gone this compression is going to get real ugly.  The next layer of cuts would really be into the bone!!!

Oh, btw, Nike can raise prices but they know it's a losing game because they only trade off lower volume to maintain higher margin (or vice versa) line or bottom line.  Either way, WS won't be happy.

BTW - Please be mindful that Nike factories in Asia are cleaner, safer than US factories exactly because of the negative press they have and could receive.  There are plenty of sweat shops but it's the off brands, the sub contractors, the lesser brands that don't have the ability to pass on pricing.  And an average $60 pr of shoes costs Nike bout $15 to purchase from the may be referring to the actual cost of the materials in the shoe but remember the factories actually charge for labor, OH, transportation, insurance, and even profit.

No, I don't work for Nike (any longer).

Wed, 12/22/2010 - 18:58 | 825034 Id fight Gandhi
Id fight Gandhi's picture

The labor issues are massively covered up. Anyone who knows the state run chinese media can attest to that.

Nike outsourced it's production to contractors to produce shoes (much like fox conn makes iPads). So in that, Nike can claim a clean conscious to human rights matters and wages. The people they claim as their own employees are treated well, but those people hire the slave labor. Makes everything nice and neat.

If a factory is in violation or caught, Nike can shun it, and push operations elsewhere. Deniability is a great benefit of contracting out your work.

And no, they aren't getting wage increases. Nothing can outpace the massive inflation in basic living costs in china. The poor are hurt very badly.

Wed, 12/22/2010 - 19:20 | 825066 hambone
hambone's picture

Nike outsourced all their production to Asia 30yrs ago and led the way for the footwear / apparel industry.  All the laid off of the N East can attest to this. 

Having lived in Asia for 5yrs and spending my time in the subcontractors factories, I can attest there are some really bad places over there.  However, the Nike's and major brands all share the same subcontractors and share the same environmental, wage, hours, etc. expectations.  Double books are pretty much a thing of the past, Koreans driving Thai's a thing of the past.  Nike's know how badly they can be hurt by openly screwing laborers.  Nike's of the world pay significantly more to the factories than the off brands, K-Marts, Wall Marts of this world.  Doesn't neccessarily mean the workers make more but usually means they offer living quarters, meals, health care, etc. vs. lack thereof at other nasty places.

Think about it, those that are most watched keep their nose clean cause most reporters love a story of the big guy screwing a little guy.  You are welcome to watch Nike and you will find violations but fewer and lesser in degree. 

Unfortunately, everybody expects the nobodies who sell to big boxes under off names to get by on the verge of legality or even under it.  If you want to help folks in Asia, Latin America, India, etc. please go look at the factories for these folks, look at their suppliers and I promise you you will find the abuses you seek.

Wed, 12/22/2010 - 19:22 | 825099 ElvisDog
ElvisDog's picture

I've noticed a sharp spike in the number of dog-related avatars on ZH.... The $147 price spike in oil was pure speculation. The current steady grinding advance has more to do with fundamentals - namely that Ben Bernanke is fundamentally trying to destroy the purchasing power of the dollar with his QE programs. The current oil price spike doesn't "serve" anyone. It is the consequence, the cost if you will, of bailing out the bankers.

Wed, 12/22/2010 - 19:26 | 825119 hambone
hambone's picture

Dogs listen to our rantings, agree w/ our diagnosis, and gladly wag their tails at our prescription to fix it all!!!

My wife, not so much.

Wed, 12/22/2010 - 21:59 | 825407 Beatscape
Beatscape's picture

You are missing the point of BB's campaign.  He is trying to stoke inflation.  If the dollar stores all turn into $2 stores, then his mission has succeeded.  His biggest concern is a Japan-style deflationary spiral.  Further, we want home prices to rise.  So again, in his eyes inflation is a good thing and a sign of rebounding economy.

Thu, 12/23/2010 - 00:57 | 825583 dehdhed
dehdhed's picture

i don't know if people still use this term for 5 dollars but maybe the could call them fin stores or abe stores or if it gets worse, sawbucks.  and heaven forbid they gotta call them benjamins someday, that would take a lot of getting used to. (or benny's in honor of what's his name?)

i like that post above that reminded me how they used to be called dime stores.  'trip' down memory lane for me.

Thu, 12/23/2010 - 01:43 | 825622 Montgomery Burns
Montgomery Burns's picture

You're probably too young, but at one time they were called "5 and dime" stores. ie: woolworths

Wed, 12/22/2010 - 17:25 | 824812 Mercury
Mercury's picture

McDonald's could raise prices on their dollar menu in response to rising costs or they could arrange things so that their inputs are cheaper.

As Krusty The Clown said under similar circumstances: "think smaller and more legs..."

Wed, 12/22/2010 - 17:26 | 824822 nate28jf
nate28jf's picture

Krusty (on TV): "You people are pigs! I'm personally going to spit in every 50th burger!"

Homer: "I like those odds."

Wed, 12/22/2010 - 17:32 | 824837 Id fight Gandhi
Id fight Gandhi's picture

I had McDonald In The last month. Their burger patties have shrunk. It used to go to the edge of the bun.

can't see why people eat this shit daily. The people that make the food there I wouldn't want cleaning toilets.

Wed, 12/22/2010 - 17:43 | 824864 tmosley
tmosley's picture

Quality burgers are getting up there.  Stopped by Whataburger the other day while I was on my way home to meet a contractor, two bacon cheeseburger meals came to $17 bucks.  That wasn't even the upsize meal.

Wed, 12/22/2010 - 18:05 | 824924 -Michelle-
-Michelle-'s picture

Wonder what Five Guys' prices are looking like.  That's the only burger I'll order out. I'll have to check it out soon.

Wed, 12/22/2010 - 18:01 | 824914 DaveyJones
DaveyJones's picture

we eat what we take :/

Wed, 12/22/2010 - 17:25 | 824813 Gully Foyle
Gully Foyle's picture

Black Dynamite: [after shooting up his business] Sorry Roscoe.
Roscoe: It's cool man. Chili and donuts ain't working out for me no-how. Maybe it's time for a change.


Cream Corn: You know what don't make no sense is the service round this motherfucka! Bitch do you see us? I'd like two sausage links, two sausage patties, two hot dogs split down the middle twice, okay? Baloney, fry that into a dome, slice it, take a spatula, smush fry it, and one waffle please.
Waitress: I can get you a waffle, but all we got is the chicken from last night. I can bring you some of that if you want some meat.
Cream Corn: Chicken and waffles?
Roscoe: That's it!
[Roscue runs out excitedly]

Wed, 12/22/2010 - 17:24 | 824814 nate28jf
nate28jf's picture

This makes me McSad.  :-(

Wed, 12/22/2010 - 17:25 | 824815 Cdad
Cdad's picture

Now Tyler, here you could have done me a solid, personally.  You did not do me a solid when you clearly could have, and I am not happy about it.

As SURELY, a $9 burrito that has gone up to $11 dollars because of the Novartis products a person needs after eating one...that now has to start RAISING PRICES is in a bit of a pickle...pun not intended....especially when there are $2 burritos freakin' everywhere.

Toss in ASTRONOMICAL STREET EXPECTATIONS and price action RESOLVING IN A THIN TAPE...and what you have here is Cdad's wildest dreams for 2011...which I think should garner more respect than Jan Hatzius's wildest dreams for 2011.

But I know that you can't be going all "Expert Network" on folk, doing me this little inside solid, so I guess I won't hold it against you...for too long...what with FBI guys popping up everywhere these days, interviewing guys in hockey helmets.


Wed, 12/22/2010 - 17:26 | 824816 Id fight Gandhi
Id fight Gandhi's picture

If mcdonalds raises the dollar menu there will be riots. Moms screaming how will I feed my keeeds.

Think of the fights they have at popeyes when they sell out of chicken on discount days x a million.

Oh the tragedy!

Obama where are thou?

Wed, 12/22/2010 - 17:44 | 824868 tmosley
tmosley's picture

This is exactly where the high denomination banknotes come from during hyperinflation.  The governments are forced to print to keep people from starving/rioting.

Wed, 12/22/2010 - 19:05 | 825058 Id fight Gandhi
Id fight Gandhi's picture

We used to have high number bank notes. Some Grover clevelands are still out there yet fetch a more than par by collectors.
They feared illegal transactions and pulled all bills over 100.

What's funny is you occasionally here stories of 2 dollar bills being claimed as fake by idiot merchants calling the cops.

You know what I haven't heard much about other than movies? Bearer bonds. They cracked down in 80s with those.

Wed, 12/22/2010 - 19:25 | 825112 ElvisDog
ElvisDog's picture

Hah, one of the amusing things about the original "Die Hard" is that the German terrorists are trying to steal negotiable bearer bonds. At one point Hans says "When they figure it out, we'll by lying on a beach earning 20%". Those were the days.

Wed, 12/22/2010 - 20:00 | 825206 tmosley
tmosley's picture

Christ, if I could earn 20%, I'd probably be laying on a beach too.

Wed, 12/22/2010 - 18:12 | 824935 -Michelle-
-Michelle-'s picture

They have discount days at Popeye's?  Where have I been?

Thu, 12/23/2010 - 02:50 | 825696 dark pools of soros
dark pools of soros's picture

1 meal a day at the Country Home Buffett!!!!!  load up for $9!!!!

Wed, 12/22/2010 - 17:26 | 824818 Gully Foyle
Gully Foyle's picture
Dupea: I'd like a plain omelette, no potatoes, tomatoes instead, a cup of coffee, and wheat toast.
Waitress: No substitutions.
Dupea: What do you mean? You don't have any tomatoes?
Waitress: Only what's on the menu. You can have a number two - a plain omelette. It comes with cottage fries and rolls.
Dupea: Yeah, I know what it comes with. But it's not what I want.
Waitress: Well, I'll come back when you make up your mind.
Dupea: Wait a minute. I have made up my mind. I'd like a plain omelette, no potatoes on the plate, a cup of coffee, and a side order of wheat toast.
Waitress: I'm sorry, we don't have any side orders of English muffin or a coffee roll.
Dupea: What do you mean you don't make side orders of toast? You make sandwiches, don't you?
Waitress: Would you like to talk to the manager?
Dupea: ...You've got bread and a toaster of some kind?
Waitress: I don't make the rules.
Dupea: OK, I'll make it as easy for you as I can. I'd like an omelette, plain, and a chicken salad sandwich on wheat toast, no mayonnaise, no butter, no lettuce. And a cup of coffee.
Waitress: A number two, chicken sal san, hold the butter, the lettuce and the mayonnaise. And a cup of coffee. Anything else?
Dupea: Yeah. Now all you have to do is hold the chicken, bring me the toast, give me a check for the chicken salad sandwich, and you haven't broken any rules.
Waitress: You want me to hold the chicken, huh?
Dupea: I want you to hold it between your knees.
Waitress: Do you see that sign, sir? Yes, you'll all have to leave. I'm not taking any more of your smartness and sarcasm.
Dupea: You see this sign? [He sweeps all the water glasses and menus off the table]
Wed, 12/22/2010 - 17:38 | 824852 Bay of Pigs
Wed, 12/22/2010 - 22:48 | 825451's picture

I was attending a business luncheon when the woman beside me ordered a chicken salad sandwich, hold the chicken salad. I laughed and mentioned Nicholson but only got a blank stare.

Go figure.

Wed, 12/22/2010 - 17:28 | 824819 bob_dabolina
bob_dabolina's picture

I have been taking pictures of the prices/quantity of various food products on the 1st of the month for the last 8 months.

I promise you (and would be more than happy to share my research) that there is most definately inflation at least as it pertains to food. I don't have to tell you it has occured in the price of energy.

The only place I don't see meaningful inflation is in housing prices.

Wed, 12/22/2010 - 17:45 | 824869 tmosley
tmosley's picture

This would make an awesome blog.  You could probably get help from people around the country to keep track of this kind of stuff.

Thu, 12/23/2010 - 05:43 | 825761 Temporalist
Temporalist's picture

The Billion Prices Project - MIT


The Consumerist


That MIT one I hadn't seen before.

Thu, 12/23/2010 - 10:50 | 826008 Brindle702
Brindle702's picture

Thank you!  Those are excellent.

Wed, 12/22/2010 - 17:27 | 824823 One Ton Lady
One Ton Lady's picture

This whole post pisses me off.  I like my Big Macs and my McDonald's french fries.

Wed, 12/22/2010 - 17:30 | 824828 plocequ1
plocequ1's picture

It dosent matter, Ive been eating McRice and beans. The Mcfarts are intense

Wed, 12/22/2010 - 17:46 | 824872 tmosley
tmosley's picture

McPotatoes will help that.

Seriously.  The enzyme in Beano comes from potatoes.

Wed, 12/22/2010 - 17:52 | 824887 DoChenRollingBearing
DoChenRollingBearing's picture

First big laugh of the day, and I really needed it!

+ 100 to you!

Wed, 12/22/2010 - 17:31 | 824832 Mr Lennon Hendrix
Mr Lennon Hendrix's picture

I wonder h0w much the average American will cut back on their fast food diet due to rising dollar menus? Stagflation meet big inflation.

Wed, 12/22/2010 - 17:32 | 824833 bankonzhongguo
bankonzhongguo's picture

If you MUST eat and frankly too many people will pay any price to feed their kids quickly, so it stands to reason that the loss leaders in fast food will rise 50 cents or even a dollar.  The $2 menu?  Why not?  Think about what these guys are selling.  Its dead calories and sugar water.  Not much different than excrament.

With such documented contempt for other human beings, the price for these kinds of products is irrellevant.  People pay for convience. 

You could feed a family for a week on $20 if you bought rice and veggies in Chinatown.  But you don't.  You need the Cheez-its and $tarbuck$.

Wed, 12/22/2010 - 19:09 | 825065 Id fight Gandhi
Id fight Gandhi's picture

Star bucks has shitty coffee. $1 coffee to go is fair. Mcd is perfect for that.

People will pay up to a point. A good number of people actually count out pennies and change to get a meal.

Wed, 12/22/2010 - 17:32 | 824834 Misean
Misean's picture

"Would you like fries with that?"

"Dude!! I told you I only have a trillion dollars in my wheelbarrow!"

Wed, 12/22/2010 - 17:33 | 824835 spongeBOB
spongeBOB's picture

The $ menu aside, fast food prices have been rising for the past 3 or 4 years. McD or BG combo meals used to be $2.99 not too long ago. Today the same crap sells for $5.99 - $6.99.

Wed, 12/22/2010 - 17:33 | 824841 bob_dabolina
bob_dabolina's picture

A #10 on the breakfast menu with a small oj and extra hash brown is $10.


Wed, 12/22/2010 - 17:41 | 824859 spongeBOB
spongeBOB's picture

yeah, and they ask you to supersize it so they can tack on another 79c or add cheese to the Whopper for an extra 50c/slice.

Wed, 12/22/2010 - 17:38 | 824851 Dr. No
Dr. No's picture

Agree, you cant walk out of one of those places with out spending over $7 with tax.  Doesnt matter what you end up getting.

Wed, 12/22/2010 - 17:37 | 824839 Escapeclaws
Escapeclaws's picture

Usually they shrink the size of the product rather than raise the price. Or they increase the container size but leave the content weight the same and charge more, as in tortilla chips. You really have to study the labels and take your calculator with you. I almost got hoodwinked the other day into buying 375 gms of chips for which the bag size was the same as 750 grams because I initially thought the first bag was the same weight as the second. You really have to scrutinize things with a magnifying glass. I find I'm spending much more time in stores than I used to, as I conduct my "research". Even the lowly potato can be suspect. I wonder how ordinary people with two digit IQs, who can't do simple arithmetic and certainly do not take a calculator to the store with them, manage. However, I expect any day to see a sign in the entrance that says "No Calculators Allowed". That will be followed by x-ray body scanners at Walmart to see if anyone is packing a calculator.

Anyway, my broker says there's never been a better time to buy Apple and Google so that's how I'm spending this year's bonus. He says there's an inverse head and shoulders and an ascending wedgie in both stocks, and that that is good.

Wed, 12/22/2010 - 17:42 | 824858 Dr. No
Dr. No's picture

Fellow cheapskate:  I even find myself double checking barcode numbers (because there are no prices on the actual product) to verify what they are advertising is what I am buying...they make that confusing too.


P.S.  A wedgie is not good, no matter who is giving it.

Wed, 12/22/2010 - 17:47 | 824871 spongeBOB
spongeBOB's picture

I'm also a cheapskate. I don't buy stocks that cost more than $10.

Wed, 12/22/2010 - 21:21 | 825364 Drag Racer
Drag Racer's picture

so Warren Buffett’s Berkshire Hathaway’s (BRKA) is out eh?

Wed, 12/22/2010 - 21:23 | 825368 QQQBall
QQQBall's picture

Fellow cheapskates - have you noticed?


In the meat dept, some items have the prices above and some below. So you loko at an package of bratwurst and the price under it says $1.99 and you think - "Wow, that's cheap"  - except that the $1.99 package is for for the shitty sausages on the shelf below the brats.  I hate that shit. 

Wed, 12/22/2010 - 19:27 | 825122 ElvisDog
ElvisDog's picture

I know for a fact that Big Macs and McD fries packages have shrunk in the past couple of years. Maybe they can claim their meals are healthier since they're smaller?

Wed, 12/22/2010 - 20:05 | 825217 ToddGak
ToddGak's picture

I could've sworn that all supermarkets used to have a "per ounce" price on all products (so you didn't need a calculator), but it seems like that is missing at some supermarkets now.

Wed, 12/22/2010 - 17:34 | 824843 Dan The Man
Dan The Man's picture


No!  The first casualty of inflation is dope!  Can anyone find decent shit for less than $70/qtr???




Wed, 12/22/2010 - 17:38 | 824850 bob_dabolina
bob_dabolina's picture

Methamphetamine is $1,700 per/ounce....$400 more than gold.

Food for thought.

Wed, 12/22/2010 - 17:50 | 824877 Dr. No
Dr. No's picture

But you cant EAT Methampeta....wait.....

Wed, 12/22/2010 - 19:30 | 825134 High Plains Drifter
High Plains Drifter's picture

What club do you ride with?

Thu, 12/23/2010 - 01:53 | 825640 Montgomery Burns
Montgomery Burns's picture

Grow your own.  Wholesale prices are down sharply over the last year. (west coast)

Wed, 12/22/2010 - 17:38 | 824847 Id fight Gandhi
Id fight Gandhi's picture

Will they increase food stamp payments or is it coming to five finger dicounting?

Wed, 12/22/2010 - 17:38 | 824849 pat53
pat53's picture

who cares, you have to be crazy to eat the shit they serve

Wed, 12/22/2010 - 18:03 | 824918 Atomizer
Atomizer's picture


Wed, 12/22/2010 - 17:43 | 824865 thepigman
thepigman's picture

Of course, MickD's will jack up the dollar menu. Why? To absorb the $613 in payroll tax cuts Obama negotiated with the Republicans for you. Go wild...y'all. Top it all off with a synthetic hot fudge sundae. Mmmmmm....good.

Wed, 12/22/2010 - 17:43 | 824866 mark mchugh
mark mchugh's picture

The Dollar Menu?  Is nothing Sacred?

Wed, 12/22/2010 - 17:53 | 824880 akak
akak's picture

Fast "Food" = Slow Suicide

The fact that so many McMericans eat such vile, salt and saturated fat-laden crap on a daily basis is just another sign of how pathetically short-sighted and dumb-downed we have become as a nation --- a nation of instant-gratification children masquerading as adults.

Wed, 12/22/2010 - 17:51 | 824882 Bahamas
Bahamas's picture

Fast food industry contributed to make American (and Bahamian) people very fat and sloppy. Obese to a point of being crippled by fat. A harmless population of consumers; drugged by high fructose corn syrup sugar beverages and fatty fried food.

Just watch the movie Food Inc, and think about eating healtier.

Wed, 12/22/2010 - 18:32 | 824976 Escapeclaws
Escapeclaws's picture

The Bahamians are the ones wearing the colorful shirts.

Wed, 12/22/2010 - 17:51 | 824884 Ricardo Pobre
Ricardo Pobre's picture

American innovation and ingenuity will win out.  Case in point - for a meer $2 you can reward yourself with a delicious, triple-decker, beef, chicken and beef sandwich.  It involves splitting a McDouble in half, inserting a McChicken, replacing the top burger patty and bun, and compressing the whole glorious thing gently with your fist.  And they'll give you everything you need if you just ask for the "McGangBang".  

Wed, 12/22/2010 - 18:25 | 824963 Escapeclaws
Escapeclaws's picture

Sounds absolutely scrumptious. However I'm holding out for the McTongue sandwich, myself.

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