Big Business: Too Big To Survive?
“Two all beef patties, special sauce, lettuce, cheese, pickles, onions on a sesame seed bun.”
~ Big Mac commercial from the seventies.
The Big Mac is Dead. Established 1967 — died 2015
Okay, its not true. Big Mac’s aren’t going anywhere. Yet. Neither are their apple pies. Snopes.com confirms the rumors of the death of the Big Mac are greatly exaggerated. But this doesn’t mean McDonalds and other fast food giants are off the hook.
What’s not exaggerated is the number of McDonald’s there are in the US. (14,267 at last count.) If anything their sagging numbers, their bloated menus, the ever-increasing competition, particularly in the healthy foods markets means fast food’s days may be numbered.
McDonald’s menu has gotten leaner. The fast-food giant has dropped several items, including six chicken sandwiches, the honey mustard and chipotle barbecue snack wraps, and the Deluxe Quarter Pounder burger (a mainstay on the menu since 1971, which according to its creator, Al Bernardin “offering a bigger ratio of meat to bun.”
And while most media sources will say McDonald’s isn’t having any problems, I dare to posit what most news sources won’t. (Because they get paid, presumably to write the news they are told to write, rather than to promote information which might affect their stock price.)
McDonald’s is on the ropes. Figuratively, at the moment, but the time will come, sooner than anyone is willing to admit, where it will be literally a question of what will it take for fast food to survive?
Bigger is Better, Right?
In most cases, our modern society will suggest that bigger is better. We like everything bigger. We supersized our dogs, turning them from wolves into Great Danes, we supersized our cars turning them into Monster Trucks. We weren’t satisfied with corporations, we turned them into mega-corporations. Making a million dollars over the course of a lifetime was good but making a million dollars by time for lunch is simply better. Gordon Gecko said it best: “Greed is good.”
But when deeply examined, is larger truly better? Is there a point when you can get so large, you are unable to survive, unable to thrive?
You betcha. Corporate boards have come under the delusion the corporations they coordinate should be able to earn double digit growth for the rest of the time they exist. There should never be down quarters, the stock market should continue to grow past any relationship with actual value of the companies being sold there.
This is where the problem can truly be seen. Some of these corporations have already grown past the point of being sustainable. They are so large they cannot be sustained by the local economies they have been vacuuming money out of for decades. These corporations are dying on the vine, unable to squeeze any more “discretionary income” from the people who live in the communities where they litter their megastores, their franchise stores, the economic fishing nets draining money from the local economies.
These megacorporations have been wildly successful for decades. Their patterns for dropping stores, working in communities, convincing management and local politics to allow them to drop a Starbucks on every other corner has worked. Too well.
They have, in effect, killed themselves. Name any megacorporation who has stores/franchises/branches in the United States and has begun spreading out overseas. Walmart, Amazon, Comcast, and the like are dying on the vine. They are the Economic Walking Dead.
Zombie corporations going through the motions of buying products, selling products, buying stock, getting investors, pretending everything is alright while they buy up more land, more resources, spending more money for diminishing returns.
Shhhh. It’s a secret no one talks about. I know it is difficult to believe.
What should be evident is these fast food corporations look and act like a corporate fishing net, sweeping money out of the economy covering the densest populations in a orgy of food-like products regionalized for your dining pleasure.
McDonald’s has plans to lay one of its signature burgers to rest. It’s supersize menu will be going away. This is part of the company’s plan to simplify its menu, and staunch the bleeding of its bottom line.
And they won’t be the last because of this simple fact.
The Fast Food Industry is a Cancer
Cancer is one of the leading causes of death in the world. Like this dreaded disease does in people cancer spread slowly at first increasing speed as it gains ground and metastasizes. When a corporation is young, if it is successful, it may spread in a fashion similar to an infection, doubling in size but requiring more resources from its host organism, until that host can no longer sustain the organism. And just like in nature, if we cannot regulate that growth, it overruns the host, killing it.
If this were happening in your body, we would call it cancer. If it happens in an economy, we call it “capitalism at its finest.” Fast food corporations don’t tend to regulate their growth; they spread across most major metropolises consuming real estate, local resources, undermining tax bases and moving money out of the communities they establish themselves in, while trying to pay their employees as little as possible.
A map of fast food restaurants will reveal how they have spread across the country evenly, appearing every couple of miles, like a fishing trawler or a strip miner drawing money out of the local environment.
The reason most people don’t realize this dragnet of cash is happening is because you only consider one of the corporations at a time. Burger King, McDonalds, Wendy’s, if plotted on a map would cover the nation in a grid whose density matched the populations centers of the nation and would either be close together or spaced so they could absorb every free dollar possible, an economic dragnet, strip-mining communities of every dollar possible.
This works as long as the people in the economy have more money available to spend than there are places to absorb it. In down times such as the Great Recession, those businesses which are dependent on the cash flow of the average citizen don’t cost less to run, but make far less money. If this recession is sustained, the only thing that can keep such a large financial profit engine running is to begin trimming costs.
- First, you keep wages low, since wages account for the largest cost after acquiring product to sell.
- Then reduction in staffing hours, ensuring as few benefits can be accrued.
- Keep hours unstable so workers don’t notice they aren’t getting benefits and their pay isn’t improving.
- When manipulating workers and worker pay isn’t enough, start cutting product lines and reducing the cost of acquiring materials, cut shipping costs and reduce quality of sourced materials.
- Cut corners in every aspect of production (leading to the creation of product such as “lean finely textured beef” to reduce costs)
- Consolidate and buy other food companies to gain economic advantages for a time, giving the illusion of financial vitality while restructuring hides economic weaknesses.
- Eventually, the only thing left to do is close store as strategically as possible, unless they wait too long and the business implodes crushed under its own debt.
McDonald’s and other food chains which have worldwide reach are at the end of the line.You see, there isn’t any place left for them to grow into. There aren’t any new markets. Yes, they will keep growing to fill every space they can, for as long as they can but there is a limit to how many different niches they can grow and fill.
Since they didn’t practice sustainable growth, they have expanded until they cannot sustain themselves with new markets, new purchases, new financial legerdemain to offset costs, allowing them to claim profits and keep their stock solid, which ensures investors and perpetuates the cycle and belief that McDonald’s is fine.
It isn’t. No corporation whose growth has looked anything like McDonald’s, practicing double digit growth, expanding all over the planet like a plague, can expect they will be doing well when entire economies collapse. This is why fast food has fought tooth and nail against pay raises. They are already unsustainable, they just can’t admit it. Yet.
Personally, one of my first jobs was at a McDonald’s many years ago. They were a decent place to work, and I learned many good habits there; punctuality, pride in workmanship, teamwork and dependability. I never would have guessed that they would grow to such a size they could not sustain themselves on their assets. McDonald’s has become too large to sustain.
And they aren’t the only ones. I suspect in the next two-to-five years we are going to see a number of financial/corporate contractions taking place. Because of the emphasis on high levels of growth and investor return on investment, these corporations will be effectively driving themselves out of business because the cost of increasing the sizes of these corporate monoliths does not scale out in terms of profits made. Each doubling in size is resulting in half the profits of the last size increase.
As people grow poorer, doubling the number of restaurants to catch even less money begins to make the same sense as fishing in an area that has been over-fished. You drop the nets, you bring up nothing, but it costs you fuel to get there and back.
Double digit growth: Should that be THE defining goal for modern business?
Big corporations need to take a long hard look at themselves in the mirror. By allowing themselves to be completely profit-motivated and driven by making ROI and ensuring their investors can make incredible profits they haven’t bothered to ask what happens if they stop making double-digit growth.
- Should investors be the sole reason a corporation continues to exist? Profit until the world burns does seem shortsighted…
- Should a corporation continue to grow out of control until there is no place left for them to go?
- Should corporations have plans to limit their growth, especially in light of the effects of megacorporations on the environment.
- Should corporations be held accountable for their externalities and the long-term effects on social outcomes, health, and the unforeseen circumstances?
- Is the only path for growth one that says, the ultimate goal is to strip-mine the communities until there’s no money left, then close the doors, give the money to the corporate executives and leave the economy and the taxpayer to clean up afterwards?
Personally, I don’t eat at McDonald’s or any fast food joints any longer. The food isn’t food. It’s a highly-processed collection of food-like products, low in food quality, high in preservatives, low in taste, but high in fat, sugar and salt to make up for the lack of actual food flavors while remaining nicely addictive to keep people coming back.
These food corporations make up the bulk of our factory farming of animals, have a huge effect on our agricultural choices and processes used to feed those animals, raising questions regarding waste management and other environmental concerns. In addition, there are numerous chemical and manufacturing companies which create preservatives to ensure shelf-life, hundreds of thousands of trucks moving their food across the country, millions of trees are destroyed for their packaging, packing and distribution of the product which once it reaches the client, is used for about 30 minutes and then thrown away.
Adding insult to injury, the quality of food in fast food only exacerbates the conditions of poor health and poor eating in communities nationwide. With the growing awareness of food deserts — areas where communities lack access to supermarkets or fresh food, fruit and vegetables, the overlap of fast food and the lack of quality fresh food has been noticed. Rising obesity in areas where fast food density is at it highest has also come under scrutiny. While there may be no direct correlation, the preponderance of fast food and lack of sources for quality food surely have some relationship.
I suspect when all is said and done and these companies choke themselves to death on the low quality of their product which people no longer want to buy, the diminished returns on their exponential growth, their effect on human health, the unwillingness of fast food corporations to pay their staff fair wages, all of this will add up to their ultimate demise.
The Earth will breathe a sign of relief as these rapacious organisms spasm and die. If we’re lucky there will still be a place to for agriculture that hasn’t been poisoned by over-use of pesticides and weed-killers, clean water to drink which isn’t downstream from a factory farm filled with e-coli and other exotic microorganisms.
Hopefully we can start making more informed choices about our food before some profiteer figures out how to charge us for the air we breathe.
Quarter Pounder, Born 1971, Died 2015.
Times, Los Angeles. “McDonald’s tests cutting Quarter Pounders, chicken sandwiches and more from menu.” Latimes.com. N.p. Web. 18 Oct. 2015. <http://www.latimes.com/food/dailydish/la-dd-mcdonalds-cut-quarter-pounders-chicken-sandwiches-menu-20141216-story.html>
Gruley, Bryan, Campbell, E., and Campbell, B. G. a. E. “The Sliming of Pink Slime’s Creator.” Bloomberg.com. N.p. Web. 18 Oct. 2015. <http://www.bloomberg.com/bw/articles/2012-04-12/the-sliming-of-pink-slimes-creator>
“McDisaster: Fast Food Is Dying.” Dailyreckoning.com. N.p. Web. 18 Oct. 2015. <http://dailyreckoning.com/mcdisaster-fast-food-is-dying-make-a-killing-from-it/>
“Fast Food Is On The Decline in America.” Business Insider N.p. Web. 9 Nov. 2014. http://www.businessinsider.com/afp-the-slow-decline-of-fast-food-in-america-2014-11
Thaddeus Howze was a New York native and found his way to the West Coast as a consequence of his military service. He’s a California-based technology executive and author whose non-fiction and online journalism has appeared in publications such as The Enemy, Black Enterprise Online, Urban Times, the Good Men Project, and Astronaut.com.
Thaddeus Howze has published two books, Hayward’s Reach (2011) and Broken Glass (2013). He maintains a nonfiction blog on science and technology at A Matter of Scale (bit.ly/matterofscale). He writes speculative fiction at hubcityblues.com.