Monday, 23 May, 2022

McDonald's profits rise as fast-food giant lifts prices carefully


Price increases helped McDonald's report higher profits Thursday as the fast-food giant navigates an inflationary environment that it argues advantages the Big Mac maker over its competitors.

 Facing elevated costs for paper, food and labor, the restaurant chain lifted prices "a little over six percent" in the United States last year without seeing consumer pushback, said Chief Financial Officer Kevin Ozan.

We "generally try and take small increments of pricing at various times versus take a lot at one time," Ozan said on a conference call with analysts, adding that the fast-food giant continues to receive good scores on value from surveys of customers.

 McDonald's also cited a successful menu and marketing blitz around the McRib and Crispy Chicken Sandwich in the United States, as well as a broadly improving Covid-19 situation in some leading markets.

- Tight labor market -

Net profit in the fourth quarter was $1.6 billion, up 19 percent from the year-ago period.

But ongoing Covid-19 restrictions in Australia resulted in "relatively flat" comparable sales, while China's results were dented by a resurgence of the virus, the company said.

Markets such as France and Germany that were strong early in the quarter had "stops and starts" near the end of the period as the Omicron variant of Covid-19 spread, Ozan said.

 McDonald's also contended with a drag from higher costs, which rose 14 percent to $3.6 billion, a bit bigger than the 13 percent rise in revenues to $6 billion.