I see it slightly differently although his research is great. I think this could be one of those carrot problems.

I think there’s a possibility Mcdonald’s hates that they need to sell Ice-cream. There’s a probability Icecream’s an inescapaable loss leader and their lowest margin item and that it is a poor loss leader due to it’s substitution effect with probably their highest margin product - soft-drinks. Because neighbouring restaurants offer ice-cream - Mcdonald’s also needs to - because people often feel like an ice-cream. If they don’t provide ice-cream while BurgerKing does then they lose high margin Fries and Softdrink sales. By offering icecreams with the minimal tolerable 85% reliability (ice cream isn’t a deal breaker - few people cancel an order when they can’t get a sunday with it - but it is an enticer - they remember Mcdonald’s ice-cream is nicer than Burger King’s when they get it - it’s the equivalent of Wendy’s ice-cream but cheaper). So there’s a possibility they’ve figured out that 85% reliability maximises high margin sales and minimises low margin ones.

Maybe they’ve figured out how to offer low cost high-quality ice-cream just enough of the time to maximise gross profit. A second order effect of 15% reliability - is the lack of reliability also discourages ice-cream orders - because - people try to avoid disappointment and decision making in group situations under time pressure.

Markup on soft-drinks and fries are massive compared to ice-cream. As you mentioned Free flow ice-cream probably has the highest food safety management cost on top of the low gross margins. It also gives staff cold hands and melts quickly in summer. It’s not a great loss leader but an inescapable one. Their other option would be to raise ice-cream prices but wendy’s grade ice-cream is an enticer. It would possibly cost more profit than 85% reliability.

There’s potential for profiting from co-operation on the lack of machine reliability but the franchisees will also be maximising profits by offering the minimal amount of ice-cream possible to not cost big-mac + frys + soft-drink sales. Mcdonald’s could possibly be paying high machine fees for exclusivity so Burger King doesn’t get an option of higher quality Ice-cream.

The only person really missing out is someone wanting an ice-cream 15% of the time - who like the franchisee - may be disappointed in the reliability of the ice cream machine - but is also better off financially - even if they don’t realise it. A possible third order effect is it breaks food addictions to things like ordering thick shakes on the way to work - regular consumption of sugar + saturated fat is not a healthy combination. Health management is a large concern for Mcdonald’s.

I’m happy with low-cost high quality ice-cream 85% of the time. I prefer that option to more expensive Ice-cream. I think this is part of the magic of the market economy. The invisible hand.

Are carrot problems killed by their public disclosure? I hope not, I like the 85% probability of cheap delicious ice-cream.

An amazing thing would be if there was tech in the machines making failure rates non random. I wonder if they fail more in winter than summer for instance which would educate the consumer about the lack of reliability so when summer comes less ice-cream is ordered.

This just my 3 minute thought experiment (brain fart) but could be a great topic for a behavioural economist such as the freakonomics blog to cover.