Thread: McDonald's Raises Prices in China

McDonald's Raises Prices in China

By Miriam Reimer
11/17/10 - 11:01 AM EST

OAK BROOK, Ill. (TheStreet) -- McDonald's(MCD_) will charge customers in China higher prices for its burgers, drinks and other menu items in an effort to offset higher costs.

The increase "is because of higher raw material prices and we've adjusted our prices accordingly," Sophia Luan, spokeswoman for McDonald's China, told Dow Jones.

China's inflation pushed up to a two-year high at 4.4% in October, leading to higher input costs for the fast-food chain. Premier Wen Jiabao said in a state television appearance Tuesday that China's cabinet is working to mitigate excessive inflation, Bloomberg reported.
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McDonald's raised prices on its products by as much as 1 yuan (15 cents) at more than 1,200 of its restaurants in China, beginning Wednesday. The food chain's last price increase was in July.

Luan did not specify an average price percentage increase.
McDonald's plans to have more than 2,000 restaurants in China within the next four years, according to Asia President Tim Fenton.

http://www.thestreet.com/story/10925096 ... china.html

. . . Pizza Hut and KFC parent Yum Brands Inc (YUM.N), McDonald's larger rival in China, in October said it expected higher labor and commodity costs to weigh on near-term margins in China. Yum operates nearly 3,700 restaurants in China.

The U.S. restaurant market offers few opportunities for established chains to expand revenue and profits. As a result, companies like McDonald's, Yum and Starbucks Corp (SBUX.O) are eyeing China and other international markets for growth.

Yum so far has kept prices unchanged, the official Xinhua News Agency reported. Yum representatives in the United States were not immediately able to comment.

http://www.reuters.com/article/idUSNTOE6AG03L20101117