By Lisa Baertlein and Phil Wahba
LOS ANGELES/NEW YORK (Reuters) - McDonald's Corp (NYSE:MCD - News) forecast higher prices for beef, dairy and other items and said it would cautiously raise prices to keep attracting diners, who are grappling with higher grocery and gas bills.
Shares fell 1.5 percent after the world's biggest hamburger chain said it planned to offset some, but not all, of its higher food costs, with small price increases throughout the year.
McDonald's results landed a day after rival Yum Brands Inc (NYSE:YUM - News) reported strong China results that masked rising food and labor costs. Chipotle Mexican Grill (NYSE:CMG -News), which has nearly all of its 1,100 restaurants in the United States, saw higher food costs eat into margins.
McDonald's and other restaurant operators are getting squeezed by accelerating food costs and must figure out how to raise prices without scaring away already skittish diners.
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