🍔 McDonald’s Cardi B(eef)

1. McDonald's Cardi B promo sparks beef with franchise owners, highlighting their saucy relationship

Cardi B likes it like that… but McDonald's franchisees aren't lovin' it. The fast-food fave announced a new combo meal last month highlighting the date-night order of rappers Cardi B and Offset. Picture: a Quarter Pounder with cheese, a cheeseburger, fries, and apple pie. But some McDonald’s franchise owners are reportedly refusing to promote it, worried the couple's R-rated lyrics could tarnish the brand's family-friendly golden arches. The chain's own policies might back them up:

• Burger bible: The "Golden Arches Code" of corporate policies forbids music partnerships involving offensive language. But Cardi B songs often get bleeped.
• Celeb-centric: McDonald’s “famous orders” partnerships with artists like BTS, J Balvin, Travis Scott, and Mariah Carey have been major sales drivers.

A beef biz's beating heart… 95% of McDonald’s locations are franchised, aka: owned by individuals. While they benefit from hitching their wagon to established brands, they pay licensing fees and often fork over a % of earnings back to HQ. It’s not the first time McD’s franchisees have pushed back against corporate: last year 87% of McD’s owners said they disapproved of the CEO. And in 2020 franchisees were in an uproar after corporate ended the $300/month Happy Meal toy rebate.

THE TAKEAWAY

Franchising is a two-way street… Heavy franchising has helped brands like McDonald's, Subway, Taco Bell, KFC, and Chipotle spread across the US. But it's more than just fast food: nearly 300 industries (like: beauty salons, motels) offer franchising. It can be a symbiotic relationship, but when disagreements arise, corporate can’t afford to ignore the people powering their profits.

2. Pharma giant Eli Lilly is slashing insulin prices 70%, which could pressure its rivals

Refill relief… Eli Lilly is lowering the price of its best-selling insulin drugs, which could ease the financial burden for millions of people with diabetes. Yesterday, Eli Lilly said it would cut prices of its name-brand Humalog and Humulin insulins by 70% this fall. The company added that it would cut its generic-insulin prices by a third.

• It’s a big deal because Eli Lilly and rivals Novo Nordisk and Sanofi supply 90% of the world’s insulin — and 100% of the US’s (#three-opoly).
• Big Pharma companies can charge as much as $200/dose of insulin, though it typically costs less than 10 bucks to produce. Last year Eli Lilly earned $3B+ in insulin sales.

The discount push… Of the 37M Americans who have diabetes, nearly a quarter use insulin. But lofty prices have led many to ration or skip doses. While insured folks typically pay less than $35/month for insulin, those without coverage face an average of $900/month. Now retailers and governments are scrambling to fill the affordability gap:

• Governments: Dozens of states have already implemented out-of-pocket caps on insulin spend, and President Biden wants $35/month to become the national norm.
• Companies: In 2021 Walmart started selling a lower-priced version of analog insulin for people without insurance. In December, Mark Cuban’s discounted Cost Plus biz said it would consider testing a three-month supply of insulin for $170.

THE TAKEAWAY

The first mover can move the rest… especially in a three-opoly like the insulin market. If Eli Lilly’s market share soars thanks to its price cuts, rivals may follow suit to keep customers. Biden and the American Diabetes Association applauded Eli Lilly’s move to cut costs, saying other drugmakers should do the same. Competitive prices, coupled with public pressure, could lead to more affordable medications for those in need.

What else we’re Snackin’

• Guac: Instacart’s sales and profits reportedly soared last quarter (ahead of its anticipated IPO). But the grocery-delivery platform’s growth may’ve been less about avos and more about ads.
• Pop: AMC shares tumbled after the world’s largest movie-theater chain said that quarterly revenue fell 15% from the previous year. The box office hasn’t rebounded to prepandemic levels.
• Rack: Kohl’s unpacked a surprisingly large loss and declining sales for its holiday quarter. The department-store giant also gave a weak outlook as consumers pulled back on discretionary spend.
• Pint: More poutine, less Pilsner: beer and wine sales in Canada fell to an all-time low. US alcohol sales also ticked down last year, a bad sign for booze biggies like Bud maker AB InBev and Molson Coors.
• Biscoff: Delta pilots agreed to a new contract that features 34% raises over four years. United, Southwest, and American are still negotiating with pilot unions, who are seeking higher pay as travel booms.

Snack Fact of the Day

Thursday

• Earnings expected from AB InBev, Victoria’s Secret, Best Buy, Costco, Six Flags, Dell, Nordstrom, TD Bank, Kroger, Hormel, Utz Brands, Broadcom, and Macy’s

Authors of this Snacks own shares: of AB InBev, Delta, Molson Coors, Walmart, and Yum Brands

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