The Cost of McDonald’s Happy Meal Toys

By Cara Wilking, Staff Attorney

The passage of San Francisco’s Healthy Food Incentives Ordinance and McDonald’s recent decision to “comply” with the law by charging 10 cents in order to be able to include toys with meals that do not meet minimal nutritional criteria has engendered a lot of public debate. The following table summarizes information from a 2005 Massachusetts Appellate Tax Board decision with Happy Meal cost information from the period between 1999 and 2001:

Toy, Food, Condiment & Paper Costs to McDonald’s Restaraunts of Massachusetts (1999-2001) in US Dollars

For the periods covered, McDonald’s reported that it paid its toy supplier 43 cents per toy. The total cost to McDonald’s for the toy and packaging of the Happy Meals was greater than the cost of food for each Happy Meal type. McDonald’s included a toy with every Happy Meal and sold the toys separately for a retail price of $1.69. The company  noted that it had a dedicated key on its registers in order to process separate toy sales.

In an issue advertisement run by McDonald’s explaining its 10 cent Happy Meal toy plan, the company wrote: “we feel a responsibility to our customers – including parents…who would like to have the option of purchasing…[a toy] separately for their kids.” In reality, prior to the ordinance all customers, including parents, had the option to purchase a toy separate from a Happy Meal. To comply with the letter and the spirit of San Francisco’s ordinance, McDonald’s could have stopped putting toys in with Happy Meals that did not meet nutritional criteria. Customers wanting to buy a toy separately, including parents, would then be treated as they always have been—rung up using the dedicated register key and charged the retail price of the toy.

The good news is that, as Michele Simon points out, there is an easy legal fix to the 10 cent toy strategy. In the short term, McDonald’s response amounts to an incredible missed opportunity to break away from a business model whereby the inedible portion of its children’s meals cost more to produce than the edible portion. The cost spent on toys could be spent to improve the nutritional profile of its children’s menu. The result could have been less trash in the form of discarded toys, a boon to fruit and vegetable producers all over the United States who supply McDonald’s, and, most importantly, healthier kids.

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