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McDonald's may raise prices on dollar menu |
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| Jul 24, 2008 11:45 AM UTC |
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Tracked Blogger
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Via BloggingStocks:
Filed under: Consumer experience, Competitive strategy, McDonald's (MCD)  Despite high commodity prices and challenging market conditions that put pressure on consumer spending, McDonald's Corp. (NYSE: MCD) was able to surprise Wall Street by reporting a stronger-than-expected second quarter profit. However, investors' positive reaction didn't last too long as the company announced it anticipates further high beef costs, which could lead to an increase in prices on its popular dollar menu.Back in May, McDonald's executives announced they had no plans to make changes to its "everyday affordability" concept, but the company's chief operating officer, Ralph Alvarez, recently noticed that the dollar menu is coming under pressure from rising ingredient costs. "The cost implications of having that value menu have changed when you see what's going on in beef and chicken," Alvarez stated to the Chicago Tribune. Alvarez didn't offer too many details on how the dollar menu might change. However, the news is not great for all you lovers of the famous double cheeseburger. A spokesman for the hamburger giant said one of the company's strategies that is already tested in some markets was to lift prices for this best-selling U.S. sandwich. Looking ahead, McDonald's said it expects cheese cost to jump by 21% this year in the U.S., while the price it pays for chicken may see a growth in a range between 5% and 6%. For 2008 U.S. beef costs, the company also anticipates an increase between 8% and 9%. Rising commodity prices was one of the main reasons why the research firm Deutsche Bank to lower its rating on the company to a hold earlier this morning. Eliza Popescu is a financial writer for the online investment advisory service Investor's Observer.Read | Permalink | Email this | Comments <map name="google_ad_map_145-1265922"><area href="http://imageads.googleadservices.com/pagead/imgclick/145-1265922?pos=0" shape="rect" coords="1,2,367,28" /><area href="http://services.google.com/feedback/abg" shape="rect" coords="384,10,453,23" /></map> 
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