Getting that McDonald's fix will soon become much more expensive. The fast-food chain giant said Thursday that it is now having a hard time keeping its menu items affordable amid the rising cost of everything from logistics, labor and beef.
McDonald's said it is also being squeezed by the rising cost of its own operations, including higher pay for workers and raw materials. Last year, the company increased its prices by around 6%. McDonald's said it might be forced to impose another price increase, but it didn't provide any specifics on the possible move.
Like McDonald's, other businesses are struggling with surging inflation, which is reaching 40-year highs across the country. McDonald's said they don't expect things to get better any time soon, adding that substantial commodity and labor inflation would only get worse.
Because ingredients for its Big Macs, McNuggets, and other items have gotten more expensive, McDonald's said that its operational expenditures had increased by 14% in the most recent quarter. The company also attributed the increase to the tight labor market.
The company said its overall food and packaging costs rose by around 4% last year, and it anticipates that the cost will increase to around 8% this year. McDonald's said it has also been experiencing difficulties in getting supplies due to supply chain disruptions. The company said it is now experiencing a shortage of potatoes in Japan, resulting in some of its outlets running out of French fries. In The U.K., the company was forced to remove milkshakes from its menu due to the lack of supply.
McDonald's said comparable sales in the U.S. increased by 7.5% in the quarter ended Dec. 31, owing to its strategic menu price increase. The company's sales increased 13% to $6.01 billion, slightly below the $6.03 billion expected by Wall Street. Comparable sales for the quarter increased by 12.3%.
The gradual lifting of COVID-19 restrictions in some states and new menu items like the McRib and crispy chicken sandwich fueled growth in digital sales to more than $18 billion in 2021.
While most of the government restrictions imposed during the pandemic have been lifted, McDonald's said that several of its dining rooms were still forced to close or had restricted capacity during its last quarter. The company added that working hours were shortened in some of its outlets during the period.
McDonald's has seen a quick increase in digital orders, which has been a boon for the company as it offset some of its pandemic-related losses. In October, the company said that it would have to raise its pricing by around 6% due to growing salaries, which had risen by at least 10%, as well as other increased expenditures.
