Why the McDonald’s Big Mac can help you budget your travel
The Big Mac is the most famous burger in the world (arguably more than the Big Kahuna Burger). You can visit a McDonald’s Cafe in 48 countries and get roughly the exactly the same burger experience. However, what you pay for your Big Mac will be different! Let’s take Japan as an example.
Japanese McDonald’s!
This is one of experiences I had the mind to explicitly seek out during my short time in Japan. Among all the famous culinary delicacies originating from Japan, I couldn’t resist trying out Japan’s take on the Big Mac for just 380 Yen!
Two things tourists should know about Japanese McDonald’s
McDonald’s in Japan are open 24/7 in major cities. In North america, this would make them the perfect place to fill your belly after a long night in the clubs or bars. At 3 am I am used to being surrounded by rowdy young adults coming down off a night of partying, myself often being among the loudest. But in Japan things are so very different. You’ll find a relatively quiet and clean McDonald’s with people relaxing as they wait for the trains to reopen at 4 am. In Tokyo’s Chibuya Square, it’s go go go 24/7 as people start and get off work at all hours of the day and night. There are even working homeless who sleep in the local McDonald’s overnight as housing in Tokyo is too expensive. This means as a tourist, McDonald’s is the most reliable place to find refuge and access Wi-Fi.
McDonald’s in Japan is the highest quality I’ve ever seen. It’s spectacularly well done. In America, the service staff seem to just throw the burgers together with minimum effort, so you get pretty sad looking Big Macs on occasion, but in Japan it’s like the spirit of Ronald McDonald himself watched over your food. This is because in Japan and other Asian countries McDonald’s is viewed as western food rather than cheap fast food. If you are in a rush or simply want to fill your stomach for as cheap as possible there are alternatives like ramen, curry or a conbini (7/11 store).
What is The Big Mac Index?
There is more to McDonald’s than just the novelty of eating a few country specific menu items. The Economist put together a Big Mac Index as a joke in 1986. They collect data each year on the price of a Big Mac in every country. The index demonstrates the concept of Purchasing Power Parity (PPP): How in theory prices for the same goods and services should be the same given the going exchange rate. A Big Mac priced at $4 in the US and 20 RMB in China are equal at an exchange rate of 1$ to 5 RMB. They should cost the same. But in practice they don’t!
As a traveler, what this index highlights is a broad sense of which countries are the cheapest to travel to!
The countries that are the cheapest to travel often have Big Macs that costs relatively less than they do in the United States or other developed countries. A Big Mac in Japan costs 380 Yen or $3.43 US Dollars whereas it costs $5.28 in the United States and $5.26 US Dollars in Canada. Although Japan isn’t necessarily cheap to travel, buying a meal and other services like hotels often costs less than the same thing in North America.
How much more expensive is Japan than Thailand to travel? Well recall Japan’s Big Mac is $3.43 US Dollars and a Big Mac in Thailand will cost you 119 Baht or $3.72 US Dollars, $0.29 more than in Japan. So the index isn’t perfect as Thailand is much cheaper to travel in general. However, there is some truth in that western chains are perceived to be more fancy in Thailand and more focused on Tourists. Street food in Thailand actually costs 20-25 baht (Non tourist prices) which is less than 1 US Dollar. So if you are planning to eat at western restaurants in Thailand, be prepared to pay much higher prices relative to the local food.
In China, a Big Mac will set you back 20.40 RMB (Yuan) or $3.17 US Dollars as the western chains are priced to be more accessible for the Chinese middle class. Roughly 7.5% cheaper than in Japan and 40% cheaper than the United States. The difference in the local price in equivalent US Dollar to the actual price of a Big Mac in the United States gives travelers a rough percentage of how much cheaper goods and service are in each country. It’s not perfect, but it’s a good reference!
So when planning your next trip abroad if you are wondering about local prices, check out the price of a Big Mac!
Why The Big Mac Index is a fun estimate of cost
As an Economist there are several reasons why this index isn’t so useful. For one it doesn’t account for the differences in labor costs, barriers to trade such as tariffs and the quality differences between countries. A Big Mac in Canada has to meet higher food standards than in the United States but not as high as the standards set by the European Union. McDonald’s in Asia is perceived as a more prestigious dinning experience as it is western food and local street food is a lot cheaper.
However the Index does show some interesting phenomena: Brazil is a good example of a country with high barriers to trade, foreign goods and services are dis-proportionally more expansive than in more open economies with low barriers. The most expensive countries are exactly as you would expect: Norway, Sweden and Switzerland.
My experience with McDonald’s basically revolves around good coffee and late night drinking food. But when I travel abroad, I try to check out the McDonald’s partly because I sometimes get desperate for western food or ironically something to help resettle my digestive track. To date, I’ve tried Thai McDonald’s, Chinese McDonald’s, Japanese McDonald’s, American McDonald’s and Canadian McDonald’s. I’m looking forward to my next Big Mac on the traveler’s road.
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