McDonald’s to hike up menu prices

McDonald's to hike up menu prices

McDonald's says it could raise prices of its fast-food items to offset rising food costs even as its net income climbed two percent to $1.24 billion for the quarter and revenue increased 4 percent to $6.21 billion.

The world's biggest hamburger chain kept competitors at bay with low-priced offerings and the strength of its McCafe and McRib brands. But it said food costs will jump between 2 and 2.5 percent in the United States as well as 3.5 and 4.5 percent in Europe in 2011.

Customers who are used to relatively inexpensive food sold in McDonald's during the recession will have to pay a little extra as prices of ingredients like beef are expected to rise as the year progresses. McDonald's has hiked some menu items in stores in the United Kingdom.

Officials of the company said it will try to keep the increases at a minimum so as not to turn away customers who have grown accustomed to its low-priced meals.

McDonald's said that sales of U.S. stores grew 4.4 percent as it launched its Caramel Mocha and Monopoly promo. Sales in Asia drove up overall worldwide sales by 5 percent.

The data is from restaurants open at least 13  months of the year rather than including new stores as the former are better measures of how well McDonald's is doing overall.

In a statement, McDonald's Chief Executive Officer Jim Skinner said that it will open 1,100 new stores this year using half of its $2.5 billion in capital spending while it plans to allocate the other half on renovating other stores and improving services.

Posted by Melanie Mendoza on Tuesday January 25 2011, 3:27 AM EST. Ref: AP. All trademarks acknowledged. Filed under Featured News, Shopping. Comments and Trackbacks closed. Follow responses: RSS 2.0