WEBVTT 00:00:00.000 --> 00:00:03.600 Non -edible food, McDonald's. McDonald's is making 00:00:03.600 --> 00:00:07.719 a major move to win back budget -conscious customers 00:00:07.719 --> 00:00:11.179 by cutting prices on popular, sorry, popular 00:00:11.179 --> 00:00:14.580 combo meals starting this week. The new, quote, 00:00:14.800 --> 00:00:18.199 extra value meals, featuring classics like the 00:00:18.199 --> 00:00:22.320 Big Mac, the McCrispy, or Egg McMuffin, with 00:00:22.320 --> 00:00:26.320 fries, any drink will cost about 15 % less than 00:00:26.320 --> 00:00:29.190 ordering the items separately. To kick things 00:00:29.190 --> 00:00:31.969 off McDonald's is offering a Big Mac meal for 00:00:31.969 --> 00:00:34.950 just eight dollars and a sausage McMuffin meal 00:00:34.950 --> 00:00:39.030 for just five dollars in most areas though prices 00:00:39.030 --> 00:00:42.369 will now be one dollar higher and places like 00:00:42.369 --> 00:00:46.549 California and Hawaii kind of makes sense. This 00:00:46.549 --> 00:00:49.729 comes as McDonald's. faces a drop in traffic 00:00:49.729 --> 00:00:53.049 from a lower income customers, especially those 00:00:53.049 --> 00:00:57.689 making under $45 ,000 a year. The CEO does admit 00:00:57.689 --> 00:01:01.009 that many no longer see McDonald's as a good 00:01:01.009 --> 00:01:04.650 value, a big problem when your brand is built 00:01:04.650 --> 00:01:08.430 on affordability. Other fast food chains are 00:01:08.430 --> 00:01:11.650 likely watching this closely and will and could 00:01:11.650 --> 00:01:15.420 be. seeing the start of a broader fast food price 00:01:15.420 --> 00:01:19.659 war as inflation weary customers push back on 00:01:19.659 --> 00:01:24.260 rising costs. And this is something that I also 00:01:24.260 --> 00:01:29.140 find very interesting because about three months 00:01:29.140 --> 00:01:32.140 ago for my MBA program, I actually had to do 00:01:32.140 --> 00:01:35.579 a whole analysis on McDonald's, like who their 00:01:35.579 --> 00:01:39.120 customers were, what was their like kind of segmentation 00:01:39.120 --> 00:01:41.900 that they were focused on. And they have always 00:01:41.900 --> 00:01:46.099 been historically trying to be one of the cheapest 00:01:46.099 --> 00:01:49.519 fast food companies. And they kind of broke away 00:01:49.519 --> 00:01:53.400 from that. So what do you think, Alex? So there's 00:01:53.400 --> 00:01:55.299 there's two pieces that I find interesting about 00:01:55.299 --> 00:01:57.299 this. And I did watch his CNBC interview where 00:01:57.299 --> 00:01:59.560 he was talking about this big new initiative 00:01:59.560 --> 00:02:03.900 of theirs to drop the prices. Right. Two things, 00:02:03.920 --> 00:02:05.780 and he mentions lower income customers dropping 00:02:05.780 --> 00:02:07.659 off specifically those under $45 ,000 a year. 00:02:07.900 --> 00:02:10.139 There's another quote from that clip that I really, 00:02:10.139 --> 00:02:13.219 really liked where he very correctly identified 00:02:13.219 --> 00:02:15.560 that right now there are two different economies, 00:02:16.340 --> 00:02:18.719 right? There's an economy of everybody making 00:02:18.719 --> 00:02:21.620 under $100 ,000 a year and an economy of everybody 00:02:21.620 --> 00:02:24.860 making over $100 ,000 a year. And if you pull 00:02:24.860 --> 00:02:27.680 those people separately, they are seeing the 00:02:27.680 --> 00:02:31.039 economy in very different ways right now. and 00:02:31.039 --> 00:02:33.759 I think he's 100 % right. And the problem is, 00:02:33.919 --> 00:02:36.560 is that their core demo, as you so interestingly 00:02:36.560 --> 00:02:39.900 pointed out, is that under $100 ,000 a year demo. 00:02:41.500 --> 00:02:44.139 And the other piece that I saw in some of the 00:02:44.139 --> 00:02:46.759 commentary on this, I think Breaking Point said 00:02:46.759 --> 00:02:55.060 something on this earlier today, was that part 00:02:55.060 --> 00:02:56.379 of the reason McDonald's and everybody started 00:02:56.379 --> 00:02:59.580 getting so expensive is, They stopped doing the 00:02:59.580 --> 00:03:01.939 things that everybody criticized them for. They 00:03:01.939 --> 00:03:04.560 actually increased the quality of their freaking 00:03:04.560 --> 00:03:07.500 hamburger meat. They started paying people more. 00:03:07.520 --> 00:03:11.340 They started doing other things to get themselves 00:03:11.340 --> 00:03:14.740 out of the bad reputation they had for being 00:03:14.740 --> 00:03:18.120 absolute garbage, right? They started experimenting 00:03:18.120 --> 00:03:20.340 more and changing their menu and doing a lot 00:03:20.340 --> 00:03:23.659 of stuff. And that increased the price of their 00:03:23.659 --> 00:03:28.129 stuff, right? and so again as a child of the 00:03:28.129 --> 00:03:30.550 80s and 90s who remembers when a quarter pound 00:03:30.550 --> 00:03:32.830 of a cheese meal with fries and a small drink 00:03:32.830 --> 00:03:38.210 was a dollar 99 literally right and i have distinct 00:03:38.210 --> 00:03:44.610 memories of it being a dollar 99 um you know 00:03:44.610 --> 00:03:50.449 it's you know it's i think he's look they got 00:03:50.449 --> 00:03:55.580 to figure this out um And it's not affordable 00:03:55.580 --> 00:03:58.860 like if I go take my kid to McDonald's man, what's 00:03:58.860 --> 00:04:00.960 a happy meal like eight nine bucks now it used 00:04:00.960 --> 00:04:05.719 to be a buck 99 like And it is a huge red flag 00:04:05.719 --> 00:04:08.639 and what what the other commentaries on this 00:04:08.639 --> 00:04:11.419 is this is the canary in the coal mine Right. 00:04:11.719 --> 00:04:15.699 It's not the S &P. It's not the Federates It's 00:04:15.699 --> 00:04:17.980 what are people spending money on and and this 00:04:17.980 --> 00:04:20.040 is an area where people are really cutting back 00:04:25.319 --> 00:04:29.879 You know Yeah So you gotta know do you think 00:04:29.879 --> 00:04:31.680 this trick that somebody in the chat said it 00:04:31.680 --> 00:04:35.699 to franchise wars hashtag Taco Bell rising does 00:04:35.699 --> 00:04:39.800 do you think that this starts a price war I So 00:04:39.800 --> 00:04:43.819 I don't think so. Um, I it will with a couple 00:04:43.819 --> 00:04:46.819 maybe fast food chains, but overall like not 00:04:46.819 --> 00:04:51.439 a I don't know all -out or because Looking at 00:04:51.439 --> 00:04:53.579 the competition, it's got to be affecting all 00:04:53.579 --> 00:04:58.639 of them, though. Yes and no. So McDonald's took 00:04:58.639 --> 00:05:04.579 a huge hit when burger chains like five guys 00:05:04.579 --> 00:05:09.040 kind of came on the scene. It is really, really 00:05:09.040 --> 00:05:11.620 expensive, but they took a demographic of people 00:05:11.620 --> 00:05:14.779 that didn't mind waiting a little bit longer, 00:05:14.980 --> 00:05:19.199 didn't. Mind paying a little bit extra for that 00:05:19.199 --> 00:05:22.100 little jump in quality. Yeah a little jump in 00:05:22.100 --> 00:05:26.819 quality and McDonald's did take a little bit 00:05:26.819 --> 00:05:30.180 of a hit there and you kind of mentioned it where 00:05:30.180 --> 00:05:33.759 they McDonald's started to try to Experiment 00:05:33.759 --> 00:05:36.339 with you know, what can we do? Should we do higher 00:05:36.339 --> 00:05:39.819 quality? Another thing that people hated about 00:05:39.819 --> 00:05:42.079 McDonald's was their customer service sucked 00:05:42.079 --> 00:05:46.560 and that kind of correlates with the price or 00:05:46.560 --> 00:05:48.939 the salary that you're offering the employees. 00:05:48.939 --> 00:05:51.100 You're not getting high quality employees like 00:05:51.100 --> 00:05:53.100 now. There's no customer service. Every McDonald's 00:05:53.100 --> 00:05:55.680 I've been into in the last two years. I'm ordering 00:05:55.680 --> 00:05:58.720 on a fucking touch pad. Right. Oh, yeah. And 00:05:58.720 --> 00:06:01.060 I barely have any interactions with the employees. 00:06:02.379 --> 00:06:09.740 Yeah, definitely. But yeah, I it will with some, 00:06:09.759 --> 00:06:12.920 but some I don't know, some fast food places, 00:06:13.100 --> 00:06:17.569 they're just they're not They're in the same 00:06:17.569 --> 00:06:22.370 market, right? Fast food burgers. But they're 00:06:22.370 --> 00:06:26.769 going after different segmentations of customers. 00:06:27.089 --> 00:06:32.750 And I think they will get it, especially now. 00:06:33.110 --> 00:06:36.269 And with all the talk of the tariffs, we're seeing 00:06:36.269 --> 00:06:40.529 prices starting to go up on things. There's this 00:06:40.529 --> 00:06:43.610 freak out of AI people getting laid off from 00:06:43.610 --> 00:06:48.959 jobs. Yeah, I think people are going there's 00:06:48.959 --> 00:06:51.139 a not everyone there's a group of people out 00:06:51.139 --> 00:06:53.100 there. They're going to be looking at what can 00:06:53.100 --> 00:06:56.680 I what is the best value? Like when I'm rushing 00:06:56.680 --> 00:07:00.699 home with the kids from soccer practice Do I 00:07:00.699 --> 00:07:05.279 want to have to go into a store or into like 00:07:05.279 --> 00:07:08.779 a shop like five guys? Probably not. I want to 00:07:08.779 --> 00:07:12.139 do fast food Do I want to spend the money for 00:07:12.139 --> 00:07:16.810 Chick -fil -a? No, I want something. Is it Sunday? 00:07:16.970 --> 00:07:21.329 Can I not get Chick -fil -A? Very true. Is it 00:07:21.329 --> 00:07:25.610 Sunday? But yeah, so I think this is going to 00:07:25.610 --> 00:07:28.250 win back some of their customers that they lost. 00:07:29.750 --> 00:07:32.230 Because McDonald's was really, really founded 00:07:32.230 --> 00:07:36.850 on a very simple menu. And I believe when it 00:07:36.850 --> 00:07:39.769 was first founded, it used to just be you didn't 00:07:39.769 --> 00:07:42.689 have options. It was just one burger. You just 00:07:42.689 --> 00:07:46.870 got a burger. and a fry like that is it and it 00:07:46.870 --> 00:07:49.850 was just like that focus on being super simple 00:07:49.850 --> 00:07:54.930 a super simple process making it very quick very 00:07:54.930 --> 00:07:57.829 cheap very affordable and they've slowly over 00:07:57.829 --> 00:08:00.529 the years kind of got away from that so i think 00:08:00.529 --> 00:08:03.889 it's going to help mcdonald's and not necessarily 00:08:03.889 --> 00:08:05.990 everyone's going to try to lower their prices 00:08:05.990 --> 00:08:10.810 and start an all -out war so i would ask you 00:08:10.810 --> 00:08:13.920 a couple of questions right Based on the fact 00:08:13.920 --> 00:08:15.639 that you're talking about different segmentations, 00:08:16.259 --> 00:08:20.060 who do you think is McDonald's most direct competition? 00:08:20.399 --> 00:08:27.220 Is it just Burger King? No, it's not just Burger 00:08:27.220 --> 00:08:31.199 King. They're also competing with Wendy's. They 00:08:31.199 --> 00:08:35.639 do have Taco Bell. I know they don't make burgers, 00:08:35.720 --> 00:08:39.440 but they do have Taco Bell as a competitor because 00:08:39.440 --> 00:08:42.470 again, like think think college kid right that 00:08:42.470 --> 00:08:46.309 like that is a super simple market like segmentation 00:08:46.309 --> 00:08:48.950 to think about someone who is in college who's 00:08:48.950 --> 00:08:52.450 looking for super quick super easy on the go 00:08:52.450 --> 00:08:54.970 i don't have time to be here also i don't have 00:08:54.970 --> 00:08:57.409 any money what is the cheapest thing that i can 00:08:57.409 --> 00:09:04.690 put in my mouth besides dirt right so taco bell 00:09:04.690 --> 00:09:07.730 is actually a competitor there with that market 00:09:07.730 --> 00:09:11.629 segmentation I'm trying to think of the other 00:09:11.629 --> 00:09:17.289 ones that like was listed out and in the Yeah, 00:09:17.549 --> 00:09:24.370 but I it's like Wendy's Taco Bell And I would 00:09:24.370 --> 00:09:28.649 quit like Shake Shack Shake Shack's expensive 00:09:28.649 --> 00:09:31.809 too. Yeah Shake Shack my daughter and my wife 00:09:31.809 --> 00:09:34.350 both love Shake Shack, but Shake Shack So I don't 00:09:34.350 --> 00:09:37.789 put Shake Shack and taco and five guys in with 00:09:37.789 --> 00:09:40.990 McDonald's so yeah that's that's what i'm saying 00:09:40.990 --> 00:09:42.929 is they're separate they're outside of that yeah 00:09:42.929 --> 00:09:45.690 my my immediate again i go mcdonald's burger 00:09:45.690 --> 00:09:49.110 king wendy's i almost put taco bell oh and jack 00:09:49.110 --> 00:09:51.809 of the box i'll put taco bell in its own category 00:09:51.809 --> 00:09:54.669 because i'm like that's tacos right it's not 00:09:54.669 --> 00:09:59.269 burgers right um so those are the four i and 00:09:59.269 --> 00:10:00.769 again kind of going back to the price war again 00:10:00.769 --> 00:10:03.509 with them dropping their prices i do wonder if 00:10:03.509 --> 00:10:05.549 burger king wendy's can't really drop their prices 00:10:05.549 --> 00:10:12.320 anymore they already suck um But I wonder if 00:10:12.320 --> 00:10:15.799 Burger King does, right? Those two have always 00:10:15.799 --> 00:10:20.899 kind of like jostled and fought. So and look, 00:10:21.000 --> 00:10:24.559 the chat is going to kill me. So let's talk Seattle 00:10:24.559 --> 00:10:27.279 now in Seattle. For those of you who are watching 00:10:27.279 --> 00:10:30.039 from outside the Seattle area on YouTube, this 00:10:30.039 --> 00:10:33.080 is Dix. This is a Seattle institution. We love 00:10:33.080 --> 00:10:35.740 Dix. Here's the thing about Dix. A plain hamburger 00:10:35.740 --> 00:10:39.139 is two dollars and fifty cents, right? A plain, 00:10:39.480 --> 00:10:41.100 single, eighth of a pound grilled patty, no kind 00:10:41.100 --> 00:10:44.299 of, two bucks, right? 250, okay? Plain cheeseburger, 00:10:44.379 --> 00:10:48.519 $3, right? Fries, they only have one size. It's 00:10:48.519 --> 00:10:52.399 $3, right? Shakes, one size. It's four bucks, 00:10:52.919 --> 00:10:56.159 right? This is Dick's. And going back to what 00:10:56.159 --> 00:10:59.620 Jay was saying a few minutes ago, this is kind 00:10:59.620 --> 00:11:02.919 of what McDonald's originally was, right? Super 00:11:02.919 --> 00:11:06.389 limited menu, cheap. Fast. If you've ever been 00:11:06.389 --> 00:11:08.330 to a Dick's and say, walk up, there are no drive 00:11:08.330 --> 00:11:10.529 -thru locations, you walk up, hey, I'll take 00:11:10.529 --> 00:11:13.429 two deluxe and a thing and you're done, right? 00:11:13.950 --> 00:11:19.210 And it is cheap, okay? It's dirt, dirt cheap. 00:11:19.549 --> 00:11:22.450 Here's the interesting thing about Dick's, right? 00:11:22.450 --> 00:11:23.830 And I actually deal with this at my job because 00:11:23.830 --> 00:11:25.450 we're talking about who compices this for labor. 00:11:26.250 --> 00:11:31.009 Dick's starts their people at $22 an hour. And 00:11:31.009 --> 00:11:34.460 it's 100 % covered health insurance. 100 % employer 00:11:34.460 --> 00:11:40.720 paid. Okay. $22 an hour and they charge $2 .50 00:11:40.720 --> 00:11:47.259 for a burger. Okay. So companies that are not 00:11:47.259 --> 00:11:54.860 there, like they're... Look, you can pay people 00:11:54.860 --> 00:11:57.740 decently, but yes, we will talk about Dix. This 00:11:57.740 --> 00:12:02.460 is the list of locations. I love Dix. It's it's 00:12:02.460 --> 00:12:07.440 it's this That's probably the closest when you 00:12:07.440 --> 00:12:13.940 talk about the the Seattle analog I do again. 00:12:13.940 --> 00:12:16.500 I think it's a canary in the coal mine. I think 00:12:16.500 --> 00:12:19.820 it's it's Them freaking out about this is telling 00:12:19.820 --> 00:12:24.399 me that we are if we're not in a recession now 00:12:24.399 --> 00:12:27.759 Right, and we just haven't called it one yet 00:12:27.759 --> 00:12:32.419 It's coming You know what I mean look man when 00:12:32.419 --> 00:12:34.500 you're drunk sometimes you just need a big bag 00:12:34.500 --> 00:12:40.220 of dicks And there's no shame In a big bag of 00:12:40.220 --> 00:12:42.679 dicks. We had a big bag of dicks at my wedding. 00:12:42.679 --> 00:12:47.360 We had so many bags of dicks at my wedding Right. 00:12:47.360 --> 00:12:56.480 It was just dicks everywhere Okay Big greasy 00:12:56.480 --> 00:13:00.389 bag of dicks This is this is the this is the 00:13:00.389 --> 00:13:10.570 actual issue that we have with YouTube Look man 00:13:10.570 --> 00:13:15.370 Just is what it is Um, yeah, I think that's pretty 00:13:15.370 --> 00:13:16.870 much what we got for this topic. Do you anything 00:13:16.870 --> 00:13:20.350 else there to add Jay? I'm just like scrolling 00:13:20.350 --> 00:13:24.210 through So I'm looking at the Harvard study that 00:13:24.210 --> 00:13:28.879 I had to like for the Harvard case study Yeah, 00:13:29.259 --> 00:13:33.519 here you go. Competition. McDonald's competition. 00:13:33.659 --> 00:13:38.000 Burger King, Wendy's, Taco Bell. It does actually 00:13:38.000 --> 00:13:42.019 list Chick -fil -A as a relatively inexpensive. 00:13:42.980 --> 00:13:46.720 Yeah. That's that's it. That's their main competitors. 00:13:46.960 --> 00:13:48.940 Again, I don't put five guys in Shake Shack in 00:13:48.940 --> 00:13:53.399 the same conversation. Now, I will say this on 00:13:53.399 --> 00:13:56.360 the five guys Shake Shack discussion. I actually 00:13:56.360 --> 00:14:00.259 prefer Shake Shack now. I like their burgers 00:14:00.259 --> 00:14:03.559 better than Five Guys. I think they've got more 00:14:03.559 --> 00:14:05.480 options and I could put more good stuff on there 00:14:05.480 --> 00:14:06.799 for basically the same price.