Before Ray Dalio built Bridgewater Associates into one of the world’s largest hedge funds, he was advising clients on a more basic business problem: the cost of feeding chickens.
That expertise, according to Dalio, helped McDonald’s to solve an early obstacle to introducing Chicken McNuggets, now one of its most popular products.
Back in the early 1980s, amid a volatile chicken market, McDonald’s needed help pricing their nuggets and limiting the risk of menu price fluctuations. Sudden changes in chicken feed costs made it difficult to price the nuggets long-term. To address this dilemma, McDonald’s hired a young consultant to hedge the cost.
Just a few years earlier, in 1977, the U.S. government announced dietary goals urging Americans to “decrease consumption of meat and increase consumption of poultry and fish,” following a report by the American Heart Association on dietary cholesterol. At the same time, rising concerns about cardiovascular disease made many Americans more health-conscious.
McDonald’s, which had built its business as a red-meat burger chain, followed the U.S. government’s advice, and turned to poultry. In 1981, McDonald’s launched Chicken ’n Chips, a combo of fries and boneless chicken pieces, however this meal was eventually phased out in favor of the McNuggets. In the mid 1970s, most Americans picked beef as their meat of choice, followed by pork and then chicken. By the 1990s, beef and chicken switched in popularity.
