BUENOS AIRES — At a recently renovated mall in the upscale Recoleta neighborhood, the McDonald’s is immaculate. Everything is shiny and new. It is a large and airy space and the chain’s new green color scheme dominates, with unique touches that include funky lounge chairs.
Keith Srakocic/Associated Press
But reading the brightly lit menu behind the cash register, it appears that something missing: The Big Mac. McDonald’s signature sandwich is not prominently advertised. Down the hall toward the bathroom there is a price list that includes a picture of the Big Mac down near the bottom.
Why is McDonald’s downplaying the world’s most famous burger? Local media started to pick up on the discrepancy earlier this year.
And given the government’s penchant to intervene in the economy, critics immediately seized on the phenomenon as an example of a widespread plan to cook Argentina’s books by minimizing the country’s
boiling inflation rate. A McDonald’s spokesman has said this isn’t so, insisting to the local daily La Nación that the issue was merely a marketing strategy, but consider these facts on the ground.
Those who order the sandwich will be taking advantage of a curious deal. While the other burger value-meals, which include fries and a soda, are priced from 32.50 pesos ($7.60) for
the Quarter Pounder with Cheese to 42 pesos ($9.90) for the Angus Bacon, a Big Mac value meal is 21.90 pesos — a big difference. At 20 pesos, the individual Big Mac is at least 4.50 pesos cheaper than the
list price of comparable options.
This is no isolated incident. In the middle-class Almagro neighborhood, the McDonald’s is certainly more downtrodden. The signs behind the register don’t shine as brightly as those in Recoleta, but the Big Mac is also kept far from the lights. And while the burgers and value meals cost a few pesos less than in the glitzy mall, the Big Mac prices are exactly the same.
The relatively inexpensive Big Mac has become an open secret in Argentina, spurred by media attention and discussions on social networks. It is being used as Exhibit A by government critics to explain how the government pressures businesses to keep certain prices frozen and manipulates economic statistics in its interest. There is widespread speculation that the government is trying to influence The Economist’s famous Big Mac Index, a “lighthearted” guide that compares burger prices across the globe to determine whether a currency is under- or over-valued.
If the government has indeed convinced the company to keep the price of the Big Mac down, while allowing others to rise, it would hardly be a unique situation in a country where price agreements have become common. In these cases, the government only cares about the price, not the products. And downplaying the Big Mac would seem to be McDonald’s way of selling as few as possible.
Argentina has one of the world’s fastest economic growth rates but that’s come hand-in-hand with one of the world’s highest inflation rates. Listening to the government though, things don’t seem so bad. The national statistics agency says the inflation for the 12 months through October was 9.7 percent. But private economists insist the real figure is more than double that number. Independent experts agree the widely discredited government statistics agency has been fudging consumer-price data for years for political gain and, to a lesser extent, to lower inflation-linked debt payments. Although no one really trusts the government’s consumer-price figures – even unions close to the administration push for salary hikes that closely mirror the private numbers – the government has fined, and even sued, economists who dare release their own estimates.
The 2011 Economist Big Mac Index showed that the Argentine peso is 19 percent overvalued, a number that soars to 101 percent when adjusted to G.D.P. per capita. Analyzing the data over the past 10 years, The Economist concluded that “burgernomics does support claims that Argentina’s government is cooking the books” because “the gap between its average annual rate of burger inflation (19%) and its official rate (10%) is far bigger than in any other country.”
None of this seems to matter to voters, who reelected President Cristina Fernández de Kirchner by a historic margin last month. Yet the Big Mac differential has managed to capture the imagination of Argentines because it shines a light on the artificial distortions that exist within the economy, not to mention the government’s penchant for short-term solutions to long-term problems.
The president often laughs off those who warn the good times can’t last. Yet the way inflation has eroded the peso’s competitiveness is real. And no amount of price-fixing or data-cooking can hide that. It is just one of the many challenges Fernández will have to deal with as she gets ready to embark on a second term next month. But for now, the recently renovated Recoleta mall is an illustration of the resurgence the economy has enjoyed following its spectacular collapse 10 years ago. On a recent Sunday, close to midnight, the ritzy McDonald’s was packed, mostly with teenagers. Not a single one of them appeared to be eating a Big Mac.