McDonald's Prices to Increase in 2022

McDonald's expects the price of its fan-favorite food to rise again later this year, with executives blaming rising inflation and other costs. Chief Financial Officer Kevin Ozan told investors on Jan. 27 the company faces "some pressure certainly" to increase prices, reports the Wall Street Journal. The company will have to balance the added prices while still appearing to give customers the value they have come to know from the world's largest fast-food chain.

The company has already risen prices while the coronavirus pandemic continues and restrictions are brought back in some markets. These issues have led to a feeling of uncertainty, labor shortages and supply-chain issues internationally, executives told investors. McDonald's has had to raise menu prices alongside rising wages to attract employees and contend with rising costs of important ingredients like meat and vegetable oil.

The increased prices have already fueled revenue jumps. The company reported a 7.5% increase in same-store sales in the U.S. during the fourth fiscal quarter, ending on Dec. 31. McDonald's also put the higher sales numbers on the shoulders of new items like its fried chicken sandwiches and the return of the McRib.

CEO Chris Kempczinski said the company is still seeing restaurants operating for 10% fewer hours due to the pandemic and short staffing, reports the Wall Street Journal. Drive-through service also slowed in comparison to 2020, and about 20% of U.S. restaurants still have closed dining rooms. The number of employees is starting to improve though, according to Kempczinski, as McDonald's and franchisees raised wages by over 10% in 2021. Meanwhile, the cost of menu items has climbed about 6% compared to the year before.

Overall, McDonald's missed Wall Street's predicted revenue increase, reports the New York Post. Sales jumped 13% to $6.01 billion, a bit lower than the expected $6.03 billion. Digital sales for all of 2021 passed $18 billion worldwide, making up 16% of its total global sales, notes CNBC.

Meanwhile, McDonald's marketing team is pushing its creativity with new ideas. Late last month, the company launched a limited-time "hacks" menu, which offered meals customers could get to make suggested combinations. One meal is called the Land, Air & Sea, which includes a Big Mac, Filet-O-Fish, and McChicken sandwich, which customers are then encouraged to smash together for one mega meal. The other meals are Hash Brown McMuffin, Crunchy Double, and Surf + Turf. The meals can only be ordered with the McDonald's app.

0comments