Iowa Public Television


Fast-Food Giant Might Raise Prices

posted on January 27, 2011

It's no secret that bad weather and tight supplies have contributed to higher prices in the commodity markets. A portion of these increases will likely be seen by consumers as they peruse grocery store shelves, go out for a meal at a nice restaurant or grab a quick burger around the corner.

While supermarket chain and restaurant owners have been known to lock-in the best price possible for their basic ingredients, eventually everyone feels the pinch. Though not famous for its fancy cuisine, one global purveyor who has served billions is no exception to this problem. While trying to keep costs down McDonald's is preparing to stave off the bite of a possible increase in domestic menu prices.

Fast-Food Giant Might Raise Prices

Extreme weather around the world has created problems for farmers and contributed to shortages. Blaming the weather and volatile commodity markets, McDonald's, the world's largest hamburger chain, may be forced to raise its prices in spite of positive earnings in the fourth quarter.

With total revenue, including receipts from franchised restaurants, McDonald's recorded earnings in 2010 at $6.21 billion. The fast-food giant has already raised some prices in the United Kingdom to cover higher costs for primary ingredients.

Officials with McDonald's say prices will be raised selectively in order to avoid turning away frugal customers. The company has refused to give specifics of which menu items will receive an increase this year.

Representatives of the international conglomerate expect food costs to rise nearly 2.5 percent in the U.S., and up to 4.5 percent in Europe this year.


Tags: agriculture food markets news weather