Ray Dalio's early hedge strategy paved the way for Chicken McNuggets

In the early 1980s, McDonald’s struggled with fluctuating chicken feed costs that threatened a new menu item. The company enlisted Ray Dalio, then building Bridgewater Associates, who had experience advising agricultural clients. Dalio connected McDonald’s with a large poultry producer and suggested a synthetic futures hedge combining soy and corn, the primary ingredients in chicken feed.

The hedge secured stable pricing, enabling the 1983 debut of Chicken McNuggets, which soon made McDonald’s the world’s second-largest chicken retailer, selling 700 million pounds annually. The assignment elevated Bridgewater’s reputation, leading to a $5 million investment from the World Bank and contributing to its growth into a $102 billion-asset firm. Dalio credits the work with helping his firm’s rise but does not claim to have invented the nugget.