Chart Of The Day: When $0.99 Becomes Unaffordable, We Have A Problem

Tyler Durden's picture

Earlier today, fast food juggernaut McDonalds reported same store sales for the month October. At -1.8%, this number was well below expectations of -1.1%, and a drop from September's 1.9%. It was driven by a 2%+ drop in comp store sales across all locations: US, Europea and APMEA, with the US performing just as bad as Europe. Most importantly, this was the first monthly drop in MCD comp sales since March 2003! So our question is: at what point does the perpetually self-deluded US population finally admit to itself that when even 99 cent meals are no longer affordable, that this country has a problem?

Charting the last 4 years of McD sales, and eagerly looking forward to 4 more years.

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tocointhephrase's picture

Looks like they will have to reduce the quality of the meat?

HappyCamper's picture

In Colorado there's a lot of wild horses causing havoc with fragile ecosystems.

Just a thought.

john39's picture

wild horse meat would be far better for you than the gmo soy and franken meat that is in mcdonalds and other fast food...'s picture

Wild horses couldn't drag me to Mickey D's.

Flakmeister's picture

Still posting that bullshit link from the The Daily Mail?

Bicycle Repairman's picture

I don't think the $0.99 price covers the necessary triple by-pass in middle age.

Lewshine's picture

One of the most relevant and real economic indicators you'll find on ZH or any other like space. Seriously, when the sheep can't afford a dollar meal either out of convenience or necessity, we are not far from third world living standards. The miraculous thing is how far this Banana Republic has gone to shelter the sheep from this reality...So much so, they asked for seconds when it came to the greater reason for their suffering. Therefore, what an AWESOME price to pay for justifying our racial guilt...Which thankfully, I'm exempt of.

Mad Max's picture

You're exempt from racial guilt?  Is this because you recognize the very concept as stupid, or because you are an alien from outer space?  Anyone who believes in the concept of racial guilt should have some, because there is NO race or ethnicity in existence that doesn't have bloody conflict in its history.

TruthInSunshine's picture

This is happening just as many franchisees have either already or will soon be forced to shell out many McBux to completely renovate their restaurants, in some cases literally tearing down the old one and rebuilding it from scratch, to conform to McDonald's franchise agreement.

It'll take the sale of a lot of McRib Sandwiches & Shamrock Shakes to ROI that.

francis_sawyer's picture

McFREEgans is the next fad...

Supernova Born's picture

McFood isn't even worth much McMoney.

CrazyCooter's picture

Even though I am professionally employed, I have worked part time at McDs in AK for almost a year due to necessity. Some observations:

  • Nothing is a dollar or less. Maybe it is different elsewhere. A hamburger is 1.39 and a cheeseburger is 1.59 IIRC. A small coffee is a buck.
  • McDs recently changed the menus ... and put the actual calories on the menu. Probably has something to do with it.
  • Our schedule used to print out on four pages. It is down to three. That means approximately 25% of the headcount left/quit/got fired. They never fire anyone but they are really good at running people off
  • Our traffic is seasonal, as there are many more folks in town during the summer with tourists and all. The last of them disappeared in late Sept, so just locals now.
  • They have some new "management" or "efficiency" plan-thing coming down the pike. I asked about it. They said infrastructre stays the same, but processes will change a lot. Not sure what will really happen.



Updte: just found this googling ... have no idea how accurate it is ...

blunderdog's picture

McDonalds is a franchise operation, so pricing at any given store doesn't NECESSARILY match on any specific item.  I suspect prices on everything in AK would be significantly higher because of the cost of shipping the food so far from the manufacturing operations.

In NYC, there are already a good number of "McCafe" layouts.  Apparently they're trying to achieve the same success that Starbuck's has had at getting people to just "sit and hang out" in some stores. 

It's interesting to note that there is at least one McDonald's with free wifi which still has signs posted that say "SEATING AREA IS AVAILABLE TO PAYING CUSTOMERS ONLY.  A TIME LIMIT OF 20 MINUTES MAY BE ENFORCED BY MANAGEMENT."

Frank N. Beans's picture

Truth, that's what they did to the McD I go to, and I don't like the redesign at all.  You live in Phoenix?  I am talking about the one on 32nd and Shea.

Supernova Born's picture

McD's is to "food", what FRN's are to "money"

TruthInSunshine's picture

Not in AZ, FNB, but it's happening nation wide. It's also happening with Taco Bell and other fast makers & sellers of edible, food-like objects. I think it's called the "Let's totally screw over our franchisees" or "Ouch, your balls!" plan.

Pretty much the only fast food place I actually occassionally go to is In'N'Out, when I'm out west and only you guys out west have them.  It's the only place that has burgers good enough to justify the occassional sin (way better than 5 Guys, Smashburger or the other hyped shit holes, too).

I hope they don't raise their prices too much, because when I'm out west again, and thinking of going there, I may have to consult the Bureau of Lies & Manipulated Statistics' Hedonic Quality Adjustment in the CPI & be forced to settle for something less expensive.

Tijuana Donkey Show's picture

When times get desperate, big corporations do what they always do; fuck the little guy. HP and Microsoft did this in the tech sector, you crush the franchisee/VAR with massive upkeep/training/building. then make them sell out for pennies on the dollar after they financed all the CAPEX. (Micr0$oft stole all of the customers like rat fuckers, which is a little easier) Why let the franchisee keep a cut, when you can just follow the model of other big chains? Franchises  are for suckers, no one would let you take a cut of something that good, unless they are getting one over on you. Mc$$$ will screw all of them the slow way, just like the tax hikes. Clean out every dime, then take them to the glue factory.

TruthInSunshine's picture

GM and Lincoln (deathbed Lincoln) are doing this now, as well.

In order to be designated as a "volume dealer" and get the financial bonuses from the manufacturer that go along with that, several million dollars have to be poured into the dealership in terms of renovations & upgrades. So, those who do this probably will be able to screw over those who don't/can't, because GM will allow them cash they can use to undercut other GM dealers.

holdingontomypants's picture

speaking of .99 cents got me to thinking about the recent economic boom in my small town in Maricopa Arizona where the local online newspaper highighted new construction and new business starting to grow in our small town of 40,000 (half Canadian winter visitors). They are currently building a .99 cent store and an Arrons rent forever until you may own it store side by side.

Guess .99 cent stores will be the next big stock boom and the rental store will be the next big competitor to walmart. Buy a $199 chinese made flat screen at walmart or rent the same for $1.99 per week forever.

And McDonalds is disgusting food that I wouldn't feed to my dog!


pavman's picture

But your dog would love it!


And the Dollar store stock craze started in 08 or 09.  I'm sure it'll pick up steam as the world economy takes a dump.  Hopefully that isn't from eating too much McDonald's...wouldn't want the world economy to get the runs!

economics9698's picture

I love the angus burger.

TruthInSunshine's picture

Anus burger? I've never tasted it but it makes sense that's the part of the cow (or possum) they use.

Anyhoo, there's a big BIG DISCOUNT ON GROUPON'D, bitchez!!!

Cathartes Aura's picture

Goodwill Industries International INC. is working on becoming the new WalMart - where else can you buy donated stuffs at close to discount retail prices?

serving their community, building new stores in a town near you!

pods's picture

Cath, we actually just had a new one built by us. I see a lot of people shopping there, the lot tends to have a decent amount of cars most times I drive past.

I like being able to drop stuff off there, but it is more for the selfish feeling of I am not throwing it away than true charity, if we are going to be honest.

There is another place (further away) that accepts more things and is staffed by those who it helps: drug addicts, convicts, etc. I LIKE to actually donate there.  I bring the good stuff because it is operated more like a co-opt than a business.  That is a place I take the stuff I no longer need but want someone to get use out of it.


Cathartes Aura's picture

it's just another indicator of where the amrkn economy is sliding - "international corporate charity" stores with high paid "business executives" sucking off the top of tax deductible donated items.

Goodwill Industries of the Columbia Willamette CEO Michael Miller earned $742,875 in 2011, a 3 percent raise, according to tax documents filed last month with the Oregon Department of Justice.

Last year, a Business Journal investigation found Miller was the highest-paid nonprofit executive in Oregon. His 2011 pay likely keeps him atop the list.

Last year’s No. 2. and No. 3 executives, Oregon Public Broadcasting’s Steven Bass and Mercy Corps’ Neal Keny-Guyer, respectively earned $333,670 and $319,996 last year.

I don't fault anyone for donating stuff they don't want/need - but I do encourage folks to donate to local non-profits, mostly staffed by volunteers who have an interest in serving their communities. . . and I never buy from a corporate "charity" leech business.

Tijuana Donkey Show's picture

Yes, but Goodwill so sooooooooo loose with the tax writeoff reciepts. Think of the CHILDREN!

TruthInSunshine's picture

Charity Navigator is an awesome website that allows you to find out what executives of all "non-profits" are paid. It's guaranteed to make you physically ill.

SafelyGraze's picture

I would like to see the Constitution used to protect the country’s full faith and credit,” Pelosi told reporters Wednesday. She was endorsing the idea that Obama should use the 14th Amendment — which states that “The validity of the public debt of the United States ... shall not be questioned” — to circumvent House Republicans who want spending cuts in exchange for another debt ceiling hike.

we need to protect the FF&C by increasing the credit part of it. 

Buckaroo Banzai's picture

Ugh. Anything Pelosi says is stupid, or communist, or stupid and communist. Dried-up, stupid, and ugly is no way to go through life.

Ben Dover's picture

Let them junk it now, but they'll come scrambling for the link when the shit comes down.

MillionDollarBogus_'s picture

Where are the fast food crowd getting their food, then...???

Costco and Sam's, and eating in..??

If this is a trend, then obesity numbers may start declining...

walküre's picture

This is an answer to Michelle's prayers!

XitSam's picture

That assumes she does.

economics9698's picture

Sam's pizza and hog dogs are not exactly fat free.

TruthInSunshine's picture

MillionDollarBogus gets an automatic /s. It's implied and it's also in his contract.

MDBogus, the people who formerly ate at McDonald's have decided to take their business to the Whole Foods Deli Counter, where shit's gettin' real:

Whole Foods: Shit's Gettin' Real, Yo
NotApplicable's picture

Actually no, it's her worst nightmare. If problems get solved by people making their own decisions, who needs the nanny-state?

RichardP's picture

Where are the fast food crowd getting their food, then...???

Because the economy is improving, more can afford to eat at a more upscale place.  Folks selling the cheap stuff benefit when the economy tanks, and suffer when it improves.


mkhs's picture

Dumpster diving is cheap and the quality is comparable.

OpenEyes's picture

+1 from me just for the King Crimson avatar

RSloane's picture according to you the economy has improved to the degree that more and more people can now eat at upscale restaurants. Glad we dogded that fiscal cliff!

bagehot99's picture

So you posit that MCD is a counter-cyclical stock? Because it isn't.

People who eat four times a week at McDonald's would continue to do so if they won the Powerball.

It's not at all 'cheap', by the way, to feed a family of four at McDonald's. It costs about 25 bucks, for which you can eat very nicely at home.


blunderdog's picture

It's not at all 'cheap', by the way, to feed a family of four at McDonald's. It costs about 25 bucks, for which you can eat very nicely at home.

25 bucks for WHAT?  A "value meal" for everyone?  If you order "the meal" of whatever crap they're foisting off on you, you're ripping yourself off.  Not only do you get badly ripped off on the price of the sodas, you also end up paying for WAY too many calories for any normal-sized person.

You can feed a family of 4 at McDonald's for about $12 in my 'hood if you just use your brain a bit.  (Although to be fair, if you're eating a lot of McD's food, your brain probably isn't working as well as it could...)

Another point, of course, is that many McDonald's diners are there because it's FAST, moreso than CHEAP.  If, like most working Americans, you only have a 30 minute lunch-break, you don't have the time to go home and turn on the stove, but there's probably a McD's nearby which can fill your stomach for $5.  That's the crowd I tend to see in those places--guys in construction wear, people wearing name-tags, and folks in various blue workshirts.