The Rise of McCurrency
McDonald’s New Fiat Comes with a Side of Fries
On August 2nd, McDonald’s launched a marketing campaign aimed at capitalizing on the discussion of cryptocurrency. Some might see this is as an adoption signal, but it’s much more ham(burger)-fisted than that. In fact, instead of the fast-food giant adding a crypto utility token to their existing mobile app, they’ve gone to the expense and trouble of minting six different coins, one for each decade of the layered mess’ existence, plus one for good measure.
In fact, McDonald’s minted 6.2 million of the coins, each redeemable for a Big Mac sandwich in the future, distributed to 50 countries worldwide. At an average cost of about $5 for that redemption, that’s a market cap of approximately $31 million.
The coin’s feature five designs celebrating the various decades of the Big Mac’s success with references to art, music and pop culture. A sixth coin commemorates the 50th anniversary. They’ll also feature seven languages — Arabic, English, Indonesian, Mandarin, Portuguese, French, and Spanish — along the rim of the coin as a tribute to the countries participating.
McDonald’s patrons have for years been trained to “come for the collectibles, but stay for the food.” The Happy Meal Effect has long been debated. While Big Macs are for the adults, the company is betting the coins will become collectors items.
The contest reminds everyone that the magazine The Economist has published a Big Mac Index since 1986, a light-hearted look at currency valuations in correlation with the price of the famous sandwich. The index provides a unique look at the purchasing power of different international currencies.
A Big Mac costs £3.19 in Britain and US$5.51 in the United States. The implied exchange rate is 0.58. The difference between this and the actual exchange rate, 0.75, suggests the British pound is 23.2% undervalued
But McDonald’s has had its problem with contest fraud in the past. In the early days of their popular Monopoly-themed contest, they lost millions when printing security professional Jerry Jacobson stole winning game pieces and sold them to friends for a cut. Over a period of years, Jacobson and friends pilfered $24 million in fraudulent cash and prizes (such as luxury automobiles), before being caught in a McSting.
So what could go wrong with a real-live coin? Plenty. Easy to slip into a pocket, coins will be targets for low-wage, hard-working fry cooks to sell on the black market. Custody of coins before the contest was already showing signs of strain the day before it started.One location posted signs in front of registers, telling customers to wait for the promotion, and inadvertently included instructions for managers on how to control supply.
From the McCoin insert: “To celebrate our golden anniversary, we’re turning our Big Mac into a global currency.”
Since these coins have a value (a free $5 sandwich), they should understandably be treated like the fiat currency they are — a promise token. McDonald’s has declared it legal tender (for one item, until December 31, 2018), void where prohibited like crypto. There will presumably be a minimum of four physical exchanges: one from the mint to McDonald’s; one from there to individual stores; one when given to customers and one when given back to the company at some future date. Each subsequent exchange is an opportunity for fraud.
Every recent Bitcoin conference features a vendor selling minted Bitcoin tokens, some featuring the phrase “In Code We Trust.” These were obviously not worth an entire Bitcoin — but they are valuable as souvenirs. Some Russian gypsies even tried pulling a physical bitcoin scam.
In Dallas, Texas a Big Mac sandwich alone (without the meal deal adding fries and a drink) sells for $4.29 plus .35 tax for a total of $4.64. There was no signage or details about the promotion, and the cashier had to call over the lead manager for distribution — and she took it from her pocket!
How long before we see an exchange trading the coin for those who live in New York or Singapore? (Rules do say the coin may not be auctioned, sold or duplicated).
In the end, McDonald’s exposure is more than $31 million, in that there is the cost of minting coins, administration of the promotion, and marketing. By jumping half-heartedly onto the crypto bandwagon, the promotion shows not a signal to cryptocurrency adoption, but rather the tendency in our McSociety to only sort of understand new things. It’s the under-digested reality of tokenomics, or just corporate capitalization on a social trend, that hasn’t quite yet arrived.
Update 8/21/2018
I have so far visited 4 locations in North Texas and received 4 McCoins, making my McCoin portfolio worth $17.44.
After just 12 days of the promotion, two of the locations told me they no longer had any coins. I made sure to visit after the lunch or dinner rush so as not to disturb them, but from their reaction it wasn’t clear if they were truly out of the coin or if it was too much of a hassle.
It was also clear at every location that front line workers did not know about the promotion. There were no signs at point of sale.
If the promotion been wildly successful, you wouldn’t know it. It doesn’t appear on the website or in the app, and social media has not been on fire.
But breaking down the numbers, McDonald’s operates 36,899 stores worldwide according to its website. There were 6.2million McCoins minted, to be distributed across 50 countries. Evenly distributed each country would get 124,000 coins; If each store got an even number, each would receive about 170. Send me your experiences!
