That is why every farmer must have his own snack bar

The fact that as a farmer you can build a multinational by simply purchasing a snack bar or snack cart showed, among other things Gerrit de Bruine to see. The potato grower and man behind Farm Frites, who died in 2020, started as a farmer with a snack truck. Farm Frites was founded in 1971 and son Piet de Bruijne is still reaping the benefits. In 2023, profits tripled to €118 million, according to filed figures. Owner De Bruijne pocketed €7 million of this amount in the form of dividend.

You can call Jan Clarebout the superlative. This 'potato king' achieved a turnover of more than one billion euros and €2022 million net profit with his potato company in 44. The extremely modest Flemish invests part of this wealth in purchasing agricultural land and growing his own French fries potatoes.

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Despite lower profit figures, McDonald's share price held up.

McDonalds profit fried
Things are not going smoothly at the major fast food chains. McDonald's presented quarterly figures at the end of July, showing that global sales fell for the first time since 2020. Due to more expensive burgers, fries and chicken snacks, fewer consumers visit the restaurant with the golden arches. Revenue in the past quarter remained virtually unchanged at $6,49 billion, compared to a year earlier, but profit fell by 12% to $2,02 billion. "Consumers do eat fries and snacks, but do so more often at home," says CEO Chris Kempczinski.

The world's largest fast food chain is struggling with exploding costs to run their restaurants and produce. A Big Mac menu has become almost a third more expensive since 2019, says US director Joe Erlinger. A similar increase is noticeable for many other products. This resulted in 0,7% fewer visitors visiting US locations, out of a total of 40.000 restaurants in 100 countries.

Prices doubled
That the cost of McDonald's food has risen sharply turns out also from a data analysis by The New York Post. This spring they looked at prices over a ten-year period in the US. This shows that prices have sometimes doubled. The chain responded to the news that inflation had been halted this year and that prices had fallen as a result. That turns out not to be the case.

In the Netherlands you also notice that the image of fast and cheap no longer applies. For a portion of medium fries you pay €3,75. The iconic cardboard container should contain 113 grams of potato sticks. If we assume a potato price of €30 per 100 kilos, then there is 3,3 cents worth of potatoes in the container. In practice, 1 kilo of potatoes is of course not equal to 1 kilo of fries. After all, you lose the peel and moisture. Even when you look at the net return, the cost does not exceed just €0,07 per portion. The remaining €3,72 of the fries goes towards the packaging, frying oil, salt and other costs. It is mainly the labor costs that McDonald's and other operators are struggling with, but the costs of their properties are also increasing.

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The prices of frozen fries for the world market.

Margin
The story that expensive potatoes are the price of a portion of fries push up we can - as every grower knows - refer to the realm of fables. Even at a potato price of €60, the most important raw material still only accounts for 18% of the total price. So you cannot escape the idea that there is a pretty good margin on the container of fries.

And that is exactly why every farmer should have his own snack bar (or snack cart). Of course, this is not feasible in practice, but it does show where profits can be made. Cut out the middleman is the saying. Or in a neat economic term: disintermediation. That's where the profit is. Men like De Bruijne and Clarebout had already seen that five decades ago. Who knows, you might soon follow in their footsteps?