10/13/2004

McDonald's raises earnings outlooks

McDonald's reported that they expected higher earnings than previously announced. McDonald's announced 3rd quarter earnings of 61 cents a share, higher than the 49 cents earlier predicted by analyst. McDonalds announced that these eanings were despite the hurricanes and other bad weather that effected the southeast and Atlantic states over the last few months.

This earnings report would suggest that the demand for fast food is inelastic. During hrricanes people are still demanding Big Mac's. After last years release of the documentary "Super Size Me," one might even suspect that the demand for Big Mac's is the same as that of illicit drugs. "Super Size Me" portrayed a vegetarian man who by experiment decided to eat nothing but McDonald's for a month. The man exhibited classic signs of withdrawal due to chemical dependance when he hadn't eaten anything for a while. The man's health deteriorated to near dangerous levels. This didn't even make a serious dent in the fast food Goliath. Instead of cocaine, America is crying for a Big Mac and fries.

www.msnbc.com

15 comments:

John West said...

People like to bag on fast food, but it does serve a purpose. As a full-time student, often times I will have no other alternative than to get fast food. I wouldn't go so far as to compare Big Macs with cocaine. Is fast food all that healthy? Well, it depends on what you order. Many fast food joints do offer delicious salads.

Bryce Larkin said...

It drives me crazy that so many people talk bad about McDonald's and other fast food places, when they still eat there. Fast food is a profitable business because millions of people want something fast to eat at a cheap price. McDonald's might not be the healthiest food but people still wanted it.

pramahaphil said...

People still want to eat fast food, but at what cost. America is by far the fattest nation in the world, and that trend is increasing. Conveinence is not a valid arguement, it would take less time to leave a couple of minutes later than to wait in line at a drive thru. The fact of the matter is people know that fast food is completely void of any nutritional value, and is in fact worse than fasting a meal, so why do people (especially overweight or obese people) use it a main source of sustainence.

I really believe that for many, fast food has a real addictive effect that should be addressed.

Rufio said...

Is fast food really addictive or does it just taste good? The reason fast food is inelastic is because it is food. There will always be a demand for it because we need food to survive. People aren't stupid and they know that a diet of straight fast food isn't going to be healthy. That is why Mcdonald's hasn't seen any negative effects from this newly released documentary. If anything this documentary release is the reason that Mcdonald's earnings are on the rise. This documentary has given Mcdonald's a lot of free advertising. Whether the advertising is good or bad it doesn't matter the Mcdonald's name is being further engrained into our heads and a lot of curiousity has arisen. The real question is how long can Mcdonald's hold out until the protestors outnumber the supporters?

John West said...

Pramahaphil really seems to actually believe that fast food is addicting. It is not. What it is, is convenient, fast, and reliable. I will agree that it is not all that healthy, but we live in a society that is based on having choices. The majority of people that are obese in this country are so by choose. We need to teach children to have better nutritional habits, and I believe that McDonalds has done some major moves to combat this issue.

stevepadilla2 said...

There are alternatives to fast food, and to say that as a student your only choice is to eat fast food is ridiculous. Pack a sandwich and an apple.

pramahaphil said...

I'll agree definatly that the cocaine comparison is a fairly large over-dramatization. No I don't believe that fast food is as addictive as cocaine. I do think that all of you will admit that fast food is certainly addictive to some types of people, maybe as pornography is addicttive to some people. The fact is that America is by far reaching epidemic proportions with respect to obesity.
I lived is southeast Asia for two years and they have fast food as well, and even more available. On every corner there are food stands selling nothing but wholesome meals that actually come from the four food groups. In that country I can honestly say I never met a obese native, except for Bangkok, where American fats food is readily available. In that city obesity is a growing problem. The point is that if you actually looked at the numbers you would see that the percentage of obese people in society is not only corralated, but directly related to how much that society partakes of fast foods or junk food.

John West said...

I guess that pertaining to this issue, stevpadilla2 carries around loaves of bread and other means in which to make sandwich's in his car. Yea everyone knows that there are other alternatives out there besides getting fast-food, but sometimes picking up something on the run is faster. Thanks for the insight though man, you are brilliant.

pramahaphil said...

Bread isn't that expensive John, in fact it is cheaper than a value meal at most fast food places.

peter_parker said...

Going back to addiction. I don't think it is the food that is addicting but the convenience. Yeah a lot of times I don't have time to go home or fix something. But if I plan ahead I can pack a lunch or find time. Maybe it all boils down to laziness.

miles said...

I wouldn't go so far to say that fast food is addicting. I think it all goes back to the simple fact that people respond to incentives. I know that between classes, I would rather buy something at campus even though it is overpriced than go home and make a cheap sandwich. Most people that buy fast food are responding to incentives (cheap and quick). Sure, there are alternatives but what are the prices for those alternatives? Clearly they are higher or else McDondalds wouldn't be doing as well as they are. Back to the addicting part...it's not that it is addicting as much as it is a habit and craving. It is just that when someone has a craving, they usually crave something that is familiar to them. I'm am more likely to crave something that I eat on a regular basis (cereal) than something that I usually don't have (bacon and eggs).

pramahaphil said...

Isn't an addiction the same thing

Maudi said...

Let's face it fast food is made by the devil. We live in a society that says it is ok to eat crappy food because we are in a hurry. I'm not saying that I don't do it because I'm a big supporter of the big Mac. It is important however that we remember what implications this food has the heart attack rate is astronomical and all because of the Big Mac. Stop eating fast food and start eat food that will save your life.

Dr. Tufte said...

-1 for no link to the article in Pramahaphil's post.

This was a good active set of arguments. Maybe the best one of the semester.

There actually is some new economic research linking the increase in obesity with the fact that food has gotten so cheap in this country.

But, I don't think the demand for fast food is inelastic. I'm not even sure there is a reasonable way to claim that fast food outlets might exploit that - they don't tend to price to take advantage of elasticity.

Having said that, I don't know why McDonalds' earnings were above expectations.

Anonymous said...

I think it would be a bit fascist to go so far as to "addressing the addictive factor." Fast food's bad for you but we have given people a lot of the information, they know it's unhealthy, that it can cause many diseases, and they choose to eat it regardless. That's they're decision that we can't deprive them the right of.