While in Aswan, Egypt, I went to a McDonald’s restaurant. When I finished my meal I went to the counter to ask “What is the price of a single Big Mac?”, “16.5 Egyptian pounds”.
I wanted to check The Economist‘s Big Mac index, their exchange-rate scorecard (see a detailed explanation), for the case of Egypt.
Already in the last list published it can be seen that they used a 13.0 pound price, while I was given 16.5 pound (probably because I went to a more touristic McD restaurant than the average). At the time of writing the post the exchange rate is: 1 E£ = 0.1726 US$.
The reference is always the price of the hamburger in USA (average of Atlanta, Chicago, New York and San Francisco), which in the latest publication of the index was 3.73$.
The dollar cost at the exchange rate of the hamburger was 2.848$; according to that, the Egyptian pound is 24% undervalued against the dollar (in relation to Aswan prices). The Economist normally calculates as well the implied purchasing power parity of the dollar: 4.42 (=16.5/3.73) while the actual exchange rate was 5.79 (=1/0.1726).
Finally, I wanted to remark 3 other things that caught my attention in the restaurant:
- They had an employee of the month award and published it.
- The uniform of the global company made local.
- They provided delivery service… I wish they did that in Europe.
-
- Employee of the month.
-
- Local uniform.
In Egypt, McDonalds has to compete with literally thousands of small and medium sized restaurants who deliver. Any marketing strategy for Mc Donald’s that doesn’t include home delivery would leave them like sitting ducks in a pond full of (Nile) crocodiles.
Regarding the price, Mc Donald’s does allow its franchisees a very limited amount of bandwidth for setting prices, indeed based on the location of the outlet. As you remarked, Aswan is a rather touristic place, with a large daily influx of Western(ised) foreigners who crave Big Macs.