20 June 2018

Hike in McDonald’s prices in China

Hike in McDonald’s prices in China

In China, the global fast-food chain McDonald’s has raised the prices by 0.5 to 1.5 Yuan on some of its menu items which include main courses, drinks and desserts and these changes were applied from 1st January 2013.

The operating costs and employee expenses of McDonald are the main reasons for the price adjustment. But the set meal with favorable prices which includes 6 Yuan breakfast and 15 Yuan lunch has been unchanged, according to McDonald’s.

McDonald’s has raised prices in China, by three times recently in January, June and October last year with the highest increase of 5 percent. McDonald’s have also raised prices in the Hong Kong market with an average growth of 2.3 percent, which is mainly because of inflation pressure imposed by the unstable economic environment.

In China, with the increase of rent, raw materials and human capital costs, the profitability of foreign fast food companies has been weakened from excessive profits to slight profits. Foreign fast food brands have also suffered because of food-safety issues, which have largely hurt their attractiveness.

In China, even the foreign fast food suffered from a slowdown in 2012. The same-store sales volume in China of Yum Brands, parent company of KFC, is expected to decrease by 4 percent year-on-year during the fourth quarter of 2012. Even though McDonald’s as announced a 2.4 % year-on-year growth globally in November, the growth was officially because of the hot breakfast sales in the U.S and the discount promotion in Europe and not because of the huge Chinese market.

The Chinese consumers are changing their eating preference to more healthy food which is also one of the causes for the raise of McDonald’s prices in China.

Source: morningwhistle.comwantchinatimes.com

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