McDonald's to raise prices in 2011
byOct 25th 2010 1:00PM
McDonald's Corp. plans to raise prices in 2011 in anticipation of higher commodity costs and a hope that an improving economy will mean diners returning to fast-food restaurants instead of cooking at home.
The company projects that commodity costs will rise 2-3% in 2011, Chief Financial Officer Peter Bensen said last week in a conference call and quoted by Chicago Breaking Business. "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.
Instead of raising prices, another chain, Carl's Jr,. recently changed the cut of its fries from thick to shoestring to save money, said Beth Mansfield, a spokeswoman for Carl's Jr. and Hardees restaurants, in an e-mail exchange with WalletPop. The change comes about a year after it introduced its thick-cut fries.
Potato prices have already risen, and everything from beef to bacon futures are expected to hit some of the highest levels in several years, Mansfield said.
McDonald's reported that third-quarter profits were up 10%, although overall the industry has had a tough time. In 2009, the restaurant industry posted its worst year in a generation. Restaurants such as McDonald's fear "the refrigerator," or grocery store, as more people buy groceries to cook at home and save money.
Consumers who stop at a grocery store on the way home for dinner are less likely to make another stop at a restaurant for a take-out dinner, Ron Paul, president of Chicago-based Technomic, told the Chicago Tribune.
"Let's say it's dinner time, and you've got to stop at the grocery store anyway," Paul said. "You're not going to pick up a burger and fries, but you can pick something up," such as lasagna or pizza.
McDonald's prices are low enough to cheaply feed a family, which is good for the wallet but maybe not as good for the heart, depending on which meal everyone chooses. You might be saving money, but you'll be paying for it by gaining weight. Any meal high in fat, calories and sodium isn't really a value, even if it's only a few dollars.
Aaron Crowe is a freelance journalist in the San Francisco Bay Area.