mcdonalds big mac index

McDonald’s prices around the world are an incredibly useful means to measuring purchasing power parity between countries but how much does a McDonald’s meal cost around the world for a South African.

 

The Big Mac Index is published by The Economist as an informal way of measuring the purchasing power parity (PPP) between two currencies and provides a test of the extent to which market exchange rates result in goods costing the same in different countries.

It “seeks to make exchange-rate theory a bit more digestible”.

The Big Mac index was introduced in The Economist in September 1986 by Pam Woodall as a semi-humorous illustration of PPP and has been published by that paper annually since then. The index also gave rise to the word burgernomics.

mcdonalds big mac index

One suggested method of predicting exchange rate movements is that the rate between two currencies should naturally adjust so that a sample basket of goods and services should cost the same in both currencies. In the Big Mac Index, the basket in question is a single Big Mac burger as sold by the McDonald’s fast food restaurant chain. The Big Mac was chosen because it is available to a common specification in many countries around the world as local McDonald’s franchisees at least in theory have significant responsibility for negotiating input prices. For these reasons, the index enables a comparison between many countries’ currencies.

The Big Mac PPP exchange rate between two countries is obtained by dividing the price of a Big Mac in one country (in its currency) by the price of a Big Mac in another country (in its currency). This value is then compared with the actual exchange rate; if it is lower, then the first currency is under-valued (according to PPP theory) compared with the second, and conversely, if it is higher, then the first currency is over-valued.

While economists widely cite the Big Mac index as a reasonable real-world measurement of purchasing power parity, the burger methodology has some limitations.

In many countries, eating at international fast-food chain restaurants such as McDonald’s is relatively expensive in comparison to eating at a local restaurant, and the demand for Big Macs is not as large in countries such as India as in the United States. Social status of eating at fast food restaurants such as McDonald’s in a local market, what proportion of sales might be to expatriates, local taxes, levels of competition, and import duties on selected items may not be representative of the country’s economy as a whole.

The Big Mac (and virtually all sandwiches) vary from country to country with differing nutritional values, weights and even nominal size differences.

Not all Big Mac burgers offered by the chain are exclusively beef. In India — which is a predominantly Hindu country — beef burgers are not available at any McDonald’s outlets. The Chicken Maharaja Mac serves as a substitute for the Big Mac.

There is a lot of variance with the exclusively beef “Big Mac”: the Australian version of the Big Mac has 22% fewer Calories than the Canadian version, and is 8% lighter than the version sold in Mexico.[18]

On 1 November 2009, all three of the McDonald’s in Iceland closed, primarily due to the chain’s high cost of importing most of the chain’s meat and vegetables, by McDonald’s demands and standards, from the Eurozone.

At the time, a Big Mac in Iceland cost 650 krona ($5.29), and the 20% price increase that would have been needed to stay in business would have increased that cost to 780 krona ($6.36). Fish, lamb and beef meat is produced in Iceland, while beef is often imported (but also exported).

So how much does a McDonald’s Big Mac cost around the world, and what does that mean for a South African?

Six most expensive (2017)

  1.   Switzerland – $6.35(R89,20)
  2.  Norway – $5.67(R79,65)
  3.  Sweden – $5.26(R73,89)
  4.  Venezuela – $5.25(R73,75)
  5.  Brazil – $5.12(R71,92)
  6.  United States – $5.06(R71,08)

Six cheapest (2017)

  1.  Egypt – $1.46(R20,51)
  2.  Ukraine – $1.54(R21,63)
  3.  India – $1.62(R22,76)
  4.  Malaysia – $1.79(R25,14)
  5.  South Africa – $1.89 (R26,32)
  6.  Russia – $2.15(R30,20)

Six fastest earned This statistic shows the average working time required to buy one Big Mac in selected cities around the world in 2015.

  1.  Hong Kong – 8.7 min
  2.  Luxembourg – 10.3 min
  3.  Japan, Tokyo – 10.4 min
  4.   Switzerland, Zurich – 10.6 min
  5.  United States, Miami – 10.7 min
  6.   Switzerland, Geneva – 10.8 min

Six slowest earned This statistic shows the average working time required to buy one Big Mac in selected cities around the world in 2015.

  1.  Kenya, Nairobi – 172.6 min
  2.  Philippines, Manila – 87.5 min
  3.  Mexico, Mexico City – 78.4 min
  4.  Indonesia, Jakarta – 66.7 min
  5.  Egypt, Cairo – 62.5 min
  6.  Ukraine, Kiev – 54.7 min

Click here to see the full list of countries and prices.


Sources: Wikipedia | Economist
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Brent Lindeque
About the Author

Brent Lindeque is the founder and man in charge at Good Things Guy.

Recognised as one of the Mail and Guardian’s Top 200 Young South African’s as well as a Primedia LeadSA Hero, Brent is a change maker, thought leader, radio host, foodie, vlogger, writer and all round good guy.

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