McDonald’s 'Pokemon' frenzy shows the collecting boom’s dark side

In Japan, they don’t call it a Happy Meal. The McDonald’s option with a toy thrown in is known as a Happy Set. But that’s where the differences end: Kids and adults on both sides of the Pacific love them — though sometimes for the wrong reasons.

McDonald’s Holdings Japan, which operates the Golden Arches in its third-largest market, is finding this out to its peril. After a "Pokemon" trading card promotion went disastrously wrong, it’s been rebuked by the Consumer Affairs Agency and is rethinking future campaigns.

The promotion seemed innocuous enough, offering two cards with every meal, one fixed and one random. But stores were inundated with scalpers seeking to flip cards online — and social media flooded with photos of dumped, uneaten meals. Children were left in tears when the restaurants ran out.

It’s the second such issue the company has faced this year, after a similar commotion involving the beloved mascot Chiikawa also resulted in backlash. A resulting sales surge means that McDonald’s might be secretly delighted; all publicity is good publicity. But the reaction grew too strong, halting plans for a Happy Set promotion with the manga "One Piece."

Controversies over McDonald’s aren’t new or limited to Japan. In the 1990s, fistfights erupted in U.S. outlets over Happy Meals offering limited edition miniature Beanie Babies (for Gen Z readers, that’s a type of archaic Labubu). And in 2017, riots broke out at some locations due to the revival of a limited-edition Szechuan Sauce, made famous online in an episode of Rick & Morty.

Like those incidents, the core issue here is a failure to anticipate demand. But these episodes are increasingly hard to predict, thanks to the confluence of two phenomena.

The first is the boom in collecting. Gen Z grew up with digital media, but is pushing back against the idea that they’ll "own nothing and be happy.” Instead, they want to own everything, sparking a COVID-19-era collecting boom from sneakers to Lego. Post-pandemic, tourists have stripped bare the shelves of Japan’s retro video-game stores. And trading cards like "Pokemon" sit at the nexus of collectability and liquidity; even low-crime Japan has seen multiple robberies at reseller stores.

The second is the rise in scalping. Once a practice that involved significant inventory risk, scalping is now easy via flea-market sites like Japan’s Mercari, regardless of morality. From a textbook economic standpoint, scalpers are valuable arbitrageurs, utilizing the price gaps between supply and demand to add liquidity to markets. They exploit willingness to pay, or WTP — the maximum amount a consumer is prepared to spend on an item, such as trading cards. In financial markets, no one bats an eyelid at such intermediaries. And anyway, if I want the card but not the queue, or live far away, why not pay someone for it?

But scalpers are, rightly, almost universally despised. They were blamed for the years-long shortage of Sony’s PlayStation 5 console after its 2020 launch, snapping up the machines as soon as they went on sale and flipping them for a profit. They’ve been accused of cornering the market for Taylor Swift and Oasis tickets. And yet while frowning on their methods, many of us nonetheless sometimes turn to them when the need is acute. Even as I write this, I am scouring resale sites for tickets to boxing great Naoya Inoue’s fight in Nagoya next month, having missed out on every legitimate way to buy them (I’m prepared to pay top dollar and my DMs are open).

Of course, not everything in the real world comes down to economics. It’s fine to say that the person who desires something the most should have it — but try explaining the concept of "willingness to pay” to a 6-year-old. It’s even more discomfiting when the scalping comes with a side of food loss. And McDonald’s is a company that many like to beat up on, even if they still secretly crave a Big Mac from time to time. In addition to the global pushback against easy calories, in Japan it has had to ride some choppy waves in recent years, following a series of food-safety scandals that included a human tooth found in a portion of fries. But it emerged with a dominant business and record profit.

There’s no easy solution to scalpers. Some suggest making the trading cards so easy to obtain that they lose their value — which somewhat eliminates the point of the promotion. Restricting purchases is an obvious choice, but less easy in the real world; McDonald's staff might lack the motivation or, for the many foreign staff, the language skills to enforce such limits. Nintendo seems to have had success cutting down on resellers of its Switch 2 console, limiting purchases to Switch 1 users with verified accounts, and working with popular platforms to automatically erase listings by resellers. Yet that’s also a slippery slope: If I don’t like my Switch 2, shouldn’t I be able to sell it?

It all shows the complexity that social media and interconnectivity is adding to even the most basic of operations. For executives who at one time needed only to think about how salty to make their fries, managing that is now the price of doing business.