McDonald's Plans to Raise Prices
By: Mary Smith
Published: Oct 24, 2021
McDonald's plans to raise prices on menu items amid paying higher commodity costs for meat and wheat.
McDonald's plans to raise prices next year. The prices will raise on several menu items as McDonald's Corp. plans to pay higher commodity costs. It is the first price hike for McDonald's in more than a year -- a time when the burger chain's sales have thrived.
The company expects to increase prices in the U.S. and Europe amid projections that commodity costs will rise between 2 percent and 3 percent in 2011. Timing and executing price increases can be tricky as McDonald's and other companies are caught between paying more for key materials such as meat and wheat. The fast-food chain has tried to keep prices low to attract price-sensitive customers in a still-weak economy.
"We'll actively look at the opportunities and with some optimism, the economy will get stronger next year and we'll get price increases," Chief Financial Officer Peter Bensen said in a statement. McDonald's reported a 10 percent increase in third-quarter earnings and added that October sales appear strong. For the U.S., the higher prices will come after the company had previously refused a hike for menu items.
The company last raised prices at its U.S. stores in late 2009. Profits since then have been bolstered by the sales of higher-margin items such as the blended-ice smoothie and frappe drinks. The strategy has helped McDonald's win market share.
The burger franchise said its global sales at stores open at least a year rose 6 percent in the third quarter, including 5.3 percent in the U.S. It expects the metric to rise 5 percent to 6 percent world-wide this month year to year. McDonald's U.S. operations delivered 5.3 percent same-stores sales growth, aided by frappe and smoothie sales.