McDonald's and Expensive Burgers

One of the metrics that best reflects what has happened with inflation in recent years, the price of a cheeseburger at McDonald's, just slapped everyone with reality yesterday. Why? Because the quarterly results released showed a decline in sales worldwide for that company, with a 12 percent drop in net profit.

A couple of months ago, journalist Jeremy Salvucci from TheStreet revealed that while a cheeseburger in the United States cost only $1 in 2019, by 2023 that same product already cost $3.15, reflecting that in that short period, the price of that food had more than tripled.

The problem is that even though this comparison was made in the United States, yesterday's quarterly results revealed that the issue has been global. The hamburger company's own CEO, Chris Kempczinski, assured in a call with stock analysts that consumers are eating more at home, and that at this moment there is a phenomenon of price discrimination and a frantic search for offers.

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McDonald's is doing poorly in many geographies this year, including France, where the Olympics are being held, and China.
When a company like McDonald's reports a decline in sales and profits because of inflation, we are facing a profound pricing phenomenon that probably has no short-term solution.

These types of corporations usually have very strong cushioning levers, with price flexibility and the possibility of adjustments in all aspects of the income statement. However, if despite these tools the company reported declines, then we are talking about cross-cutting inflationary phenomena that, just as they impact McDonald's, also impact much smaller companies in all geographies.

McDonald's has initiated an aggressive strategy to lower prices from now on. Hopefully, it works. With yesterday's results, it seems almost urgent.

ALLERGAN AESTHETICS

The developer of Botox, Allergan Aesthetics, led in Mexico by Joao Monteiro, projects that the aesthetic medicine market will reach a value of $25.9 billion in four years. The company is part of the pharmaceutical Abbvie, which has a new CEO recently: Robert A. Michael. The corporation reported a very strong second-quarter report.

SIGMA ALIMENTOS

Sigma Alimentos, the Monterrey-based company led by Rodrigo Fernández Martínez, expects a colossal cash flow of $1 billion for 2024, breaking all previous estimates. Their dollar revenue is growing at a rate of 7 percent so far this year.

BY: CARLOS MOTA
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