McDonald's Says More Price Increases Possible
Despite its second-quarter profit on strong international sales that beat analysts’ expectations, the company said price increases on its Dollar Menu could offset mounting commodity price increases.
"I don't think customers care that much if the price moves slightly away from a dollar," CEO Jim Skinner told Reuters in a recent interview. “It will always be the best value around."
The Dollar Menu double cheeseburger is one item in question, which McDonald's has tested in certain markets at prices of up to $1.29. Skinner said some prices might be adjusted, but that it would not abandon the Dollar Menu because it increases foot traffic and is key to attracting value customers.
During the first half of the year, McDonald's raised prices in the United States by 4 percent and prices across Europe by 2 percent to 4 percent. But the price rise accounted for just under half of the average annual gain in commodity prices that McDonald's faces, executives said.
While McDonald’s will continue to reducing costs and increasing efficiency, it has no plans of slowing its expansion.
"You can never shrink your way to prosperity," Skinner told Reuters. "What we need to do is grow. If we grow the top line, that will take care of the (profit) margin."