McDonald’s Arbitrage
As you would probably be aware from all the advertising going on, McDonald’s Australia has been promoting a series of Value Picks menu items.
One of the items available from the Value Picks is the Deluxe Cheeseburger, which retails for $1.95. It would appear that the Deluxe Cheeseburger is deluxe because it contains lettuce and a mayonnaise dressing. The regular Cheeseburger, which does not contain lettuce, but has a tomato-based dressing, retails for a bit higher.
This is confusing to me—-it looks like the Deluxe Cheeseburger costs more than a regular Cheeseburger. If this occurs in the financial markets, then there would be fascinating arbitrage opportunities.
It all makes sense if most people don’t like lettuce and mayonnaise and therefore the Deluxe Cheeseburger has lower intrinsic value than the regular Cheeseburger…
Also, due to the fact that you cannot resell any McDonald’s items means that you can’t actually arb it…
Oh well…