McDonald’s said it is getting ready to raise its prices on its fast-food items, burgers and fries because of higher commodities costs.
The fast-food chain is expecting commodity prices to increase by as much as 3 percent in 2011. The price increases would likely affect McDonald’s customers in the United States and Europe, but the company did not provide details.
“We’ll actively look at opportunities and with some optimism the economy will get stronger next year and we’ll get price increases,” Chief Financial Officer Peter Bensen said.
His statement came during a conference call during which McDonald’s reported third-quarter earnings rose 10 percent. The company also said that October sales were doing well.
McDonald’s has thrived compared to other restaurants during the economic recessions thanks to its low prices.
Implementing price hikes can be a tough job for McDonald’s and other companies who must pay for the rising costs of key commodities and supplies like coffee, corn and wheat, while also trying to not shun consumers who are extra sensitive to prices in a 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,” Bensen said.
McDonald’s last raised prices in 2009 but has so far refused to do so again this year in an effort to win customers away from rival chains like Burger King and Wendy’s. Profits since the company’s last price increase have been helped by sales in items with higher profit margins, such as blended fruit smoothies.
The strategy has helped the company increase market shared and increase sales by 6 percent worldwide.