3. McDonald's Ketchup Caper
Ease up, Ronald McDonald! It's not like the Hamburglar is stealing the recipe for your secret sauce. We're talking about good old Heinz ketchup here!
McDonald's (MCD - Get Report) announced its plans to replace Heinz as its ketchup supplier last Friday, ending its 40-year relationship with the condiment company. Mickey Dees management took the drastic step as a result of Bernardo Hees, the former CEO of competitor Burger King, being installed as head of Heinz this past June after Berkshire Hathaway and 3G Capital bought the company for $28 billion.
"As a result of recent management changes at Heinz, we have decided to transition our business to other suppliers over time," said McDonald's in a statement. "We have spoken to Heinz and plan to work together to ensure a smooth and orderly transition."Orderly transition? We're not talking about changing presidential administrations here. We're talking about ketchup! Or catsup, depending where you buy your fries. Either way, it's still a draconian resolution to a less than pressing problem for the stagnating 34,000 plus restaurant chain, which continues to blame its flat sales on the economy instead of its own very real problems. McDonald's shares have returned 11% in the past year vs. 26% for the S&P 500 as its salads just aren't selling enough to keep up with fresher food alternatives like its own spin-off Chipotle (CMG). Meanwhile, on its super-high calorie flank, McDonald's is fighting off Wendy's (WEN), which has a hit with its Pretzel Bacon Cheeseburger and Taco Bell which continues to expand its Doritos Locos Tacos line. And while Chief Executive Don Thompson is desperately trying to shake-up the menu by adding things and chicken wings, it's still enough to make a shareholder grimace. "As a matter of policy, Heinz does not comment on relationships with customers," said company spokesman Michael Mullen. That's certainly a smart move since McDonald's may very well reconsider its decision in the not so distant future. Lucky those Heinz guys understand the value of anticipation.
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