Recently a client sent me an article published in “Potato Business” – an online site supporting the “potato industry worldwide”. As she had intended, I laughed out loud when I read the website name and then, the following excerpt from April 2022:
“The fry attachment rate in the US, is the rate at which consumers order fries when visiting a restaurant or other foodservice outlets…” – T. Werner, President/CEO Lamb Weston
While most of us are aware of the widely referenced economic indicators such as GDP (Gross Domestic Product), CPI (Consumer Price Index), Housing Starts and Interest Rates, how many of us have heard of the “French-Fry Index”? I hadn’t either, but it does exist, certainly in the world of potatoes and fast-food chains.
As recently as May 1st, in MediaPost’s MarketingDaily page, Todd Wasserman writes about this very subject. Here’s an excerpt:
“Do you want fries with that? Increasingly, the answer to that question is no, McDonald’s CEO Chris Kempczinski told investors last week. "We are seeing a slight decrease in units per transaction," Kempczinski told investors. "Certainly the customer is being mindful about how they're spending their dollar or their euro.
Some economists have seen a cutback in French fry orders as a harbinger of a recession for some time… The French fry cutbacks come as JPMorgan sees the likelihood of a mild recession in the second half of the year.”
I view the above information as good news and here’s why… if it is indeed true that consumers are ordering fewer fries because they feel they can’t afford them (a large fries is currently $1.89 USD at McDonalds), then surely we’re approaching, if not sitting right in the bottom of the economic cycle trough. Of course the caveat here is that if the average person is not ordering fries because they’ve become more “health conscious”, then my line of reasoning could be off. But who are we kidding – obesity levels continue to rise in North America. In fact, they have doubled since 1980 [gulp].
There are a whole host of other indexes out there… Not surprisingly (now that we’re tuned into the Fry Index), there’s the “Big-Mac Index” and “Happy Meal Indicator”. How about the “Men’s Underwear Index” or “Japanese Haircut Indicator” and the “Lipstick Index”?
Notwithstanding all of the noise, I continue to feel strongly that the current discomfort we’re feeling in terms of the stock market volatility will indeed wane. I still expect the excellent group of companies we own to perform well into the end of 2023, and beyond. It’s often tough to sit tight and wait, but I congratulate all of my clients for doing just that. Let the dividends and interest roll in, while you enjoy your summer!
Libby
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