Most people are all too familiar with driving through the McDonald’s drive-thru and ordering a Happy Meal.
There is nothing like the joy of opening the bright red and yellow box to enjoy some fresh salty fries while sipping a crisp Coke and then reaching for a McDonald’s hamburger.
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The thought of no longer having hamburgers as an option on the McDonald’s menu would turn any Happy Meal into a sad one. Unfortunately, the fast-food giant might have just jeopardized its future supply by taking the biggest gamble on its top partners over unresolved beef.
With over 41,000 locations worldwide and a menu composed of over 50% protein-based items, it is no surprise that McDonald’s is the world’s largest purchaser of beef and pork.
The fast-food giant’s high demand for Big Macs and McDoubles can only be satisfied by purchasing millions, if not billions, of pounds of beef yearly from multiple meatpacking companies, including some of the most prominent ones in the industry.
During McDonald’s Q2 earnings call for 2024, CEO Christopher Kempczinski said that due to inflation and customers’ more conscious spending, McDonald’s is looking to broaden its value offerings.
Hence, the fast-food giant decided to extend its $5 value meal deal through the end of the year, even though the offer was originally only supposed to run for a few weeks in the summer.
Although a great way to provide its customers with more affordable options, McDonald’s seems to be struggling to keep up with its deal offerings, maintaining lower prices amid the recent food price increases.
Upon further analysis, McDonald’s found its biggest price issue and made a shocking major move to try to fix it.
A Happy Meal is displayed for a photograph on a tray at a McDonald’s Corp. restaurant.
McDonald’s sues the top meat packing giants for breaking antitrust laws
On Friday, McDonald’s (MCD) filed an antitrust lawsuit with the New York Federal Court against the top four meatpackers, Tyson (TSN) , JBS (JBSAY) , Cargill, and National Beef Packing Company (NBP) , and their subsidiaries.
These four meatpacking giants control around 80% of the U.S. beef production industry, making them the most prominent meat processing companies worldwide.
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McDonald’s is suing these leading meat producers for allegedly inflating beef prices, which violated federal antitrust laws and fair competition practices.
As stated in the lawsuit, the meat-packing giants have been successfully violating the law since at least 2015 by paying less for cattle and the production process, subsequently limiting supply to spike prices.
According to a letter written in 2021 by 26 U.S. senators that was included in the lawsuit:
“For far too long, cattle producers and consumers have been hurt by the increasing concentration of market power and anticompetitive actions of just a few meatpacking companies. Their collective power over the cattle and beef processing industry allows them to seemingly control prices at their will.”
The meatpacking giants have faced previous antitrust lawsuits
Although damaging for business, this is not the first time that some of the accused meatpackers have faced antitrust lawsuits.
In 2021, Tyson agreed to pay a $221.5 million settlement for a lawsuit that accused the company of conspiring to inflate chicken prices, and in 2022, BJS agreed to settle for $52.2 million in a price-fixed lawsuit.
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Perhaps McDonald’s is also looking for a hefty settlement.
The fast-food giant seeks monetary restitution for the alleged illegal wrongdoings of the accused meat processing companies, but a specific amount has yet to be disclosed.
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