Described as “a fun guide to whether currencies are at their ‘correct’ level”, the Economist created the Big Mac Index — yes, as in the hamburger.
The index is based on the theory of purchasing power parity (PPP), and that the price of a McDonald’s Big Mac in a particular country has a direct correlation to the value of their currency in relation to the U.S. Dollar.
Did you get all that?… Good, now explain it to me.
Original Big Mac Index here.
So, it sounds like McDonald’s has a formula for pricing their Big Mac’s based on the local currency of each national market, therefor making it easy for them to be a global business and still be able to focus on business back in their American headquarters in Illinois.