Friday, December 10, 2004

The Halo Effect

I probably stopped eating regularly at McDonalds somewhere back in 1998. Before then I ate way too much of it even though I knew I shouldn’t. At the beginning of 1999 my friend Juana and I decided to go cold turkey and not eat at McDonalds (which was, of course, conveniently located, as it still is, just a few blocks from where we were working) for 6 months. And we didn’t. Come June, we made our way over, ordered lunch, consumed, and thought, “Boy, that kinda sucked!”

If that wasn’t enough, Schlosser’s Fast Food Nation went a long way toward presenting me with a bounty of reasons I had formally been nagged and troubled by but hadn’t yet gathered into a cogent thesis with enough power to wallop me over the head in such a way as to make me appreciate, beyond a doubt, that eating at McDonalds was not only bad for my health- but that it was also part of a fast-food industry that perpetuates and sustains numerous unfortunates- particularly its treatment of workers all along the chain and its predatory youth marketing. That Ronald McDonald is one insidious evil clown mother-fucker and Schlosser’s book does a swell job telling us why.

Still, because of its global reach and iconic status, I’ll always be interested in what McDonald’s is up to. I knew they had been struggling over the last few years, especially in 2002 when they chalked up their first quarterly loss since 1954. According to a recent Economist article, however, McDonald’s has come roaring back, with sales up 13% for the first half of this year and net profits up 38% compared to this time last year.

How are they doing it? Well, first off they’re making things even more efficient. According to the article:

Every McDonald’s has a “travel path” along which a member of staff must walk- sometimes every 30 minutes- to ensure that all is well. The company is now testing small hand-held devices, which can be used like electronic clipboards by those making the rounds. Failures to check, say, the temperature inside a refrigerator (the devices are fitted with a probe) or to scan a location barcode (they have a scanner too) when checking the play area, will be recorded. If too many incomplete checks build up, the device can automatically alert the local manager by ringing his mobile phone.

At which point, I presume, the local manager will call his staff and threaten to boil all of them in a vat of McNugget cooking oil.

What’s really interesting (or depressing) is the other explanation for the big turnaround. Wary of the victories scored against Big Tobacco and the recent onslaught of obesity lawsuits McDonald’s has introduced healthier menu items. So are those hefty profit margins being driven by salads? Not quite.

McDonald’s officials insist their salads are priced to be profitable, arguing that if they were not its franchisees would not want to sell them. But then, by some measures, supermarket loss-leaders are also profitable because they bring in customers who buy other products. Nevertheless, salads are sending a message to millions of customers: that it is now acceptable to eat at McDonald’s again because the menu is “healthier”- even though the vast majority still order a burger and fries.

“There is no question that we make more money from selling hamburgers and cheeseburgers,” says Matthew Paull, McDonald’s chief financial officer. Sales growth is, he says, being driven by the “halo effect” of healthier food appearing on the menu.

Weird, huh? By being in the vicinity of salads and other lighter options, the McDonald’s customer fuelling their recent growth feels more at ease eating a Big Mac. It’s as though the very presence of salads and healthier foods creates new equivalencies- that somehow eating a Big Mac is analogous to eating some iceberg with tomatoes.

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