McDonald’s says more product price rises possible

SOURCE:

Reuters

2008-08-07 01:25:10

McDonald’s says more product price rises possible

BEIJING (Reuters) –

McDonald’s Corp (MCD.N) said on

Thursday it was considering further price increases, but would

do nothing that slowed customer traffic into its global network

of stores.

The world’s largest restaurant chain posted second-quarter

profit that beat expectations on strong international sales,

but said to offset mounting commodity pressures it was looking

at changes to the popular Dollar Menu, which lures value

diners.

“I don’t think customers care that much if the price moves

slightly away from a dollar,” Chief Executive Jim Skinner told

Reuters in an interview on the sidelines of an event to mark

its sponsorship of the Olympics.

“It will always be the best value around,” he said.

Much speculation swirls around the fate of the Dollar Menu

double cheeseburger, which McDonald’s has tested in certain

markets at prices up to $1.29.

Skinner said McDonald’s might adjust some prices in the

menu, but that it would not abandon the Dollar Menu because it

was a key part of bringing customers into its stores.

“We won’t get rid of the Dollar Menu … we must maintain

traffic,” Skinner said.

During the first half of the year, McDonald’s raised prices

in the United States by 4 percent and prices across Europe were

boosted by 2 percent to 4 percent.

But the price rise accounted for just under half of the

average annual gain in commodity prices that McDonald’s faces.

While reducing costs and increasing efficiency are a part

of McDonald’s everyday operations, the company would not scale

back its expansion.

“You can never shrink your way to prosperity,” he said.

“What we need to do is grow. If we grow the top line, that will

take care of the (profit) margin.”

McDonald’s international operations continued to grow at a

brisk rate, helping to insulate the company from the

housing-led U.S. economic downturn that is hurting upscale

restaurants.

($=6.85 yuan)

(Reporting by Kirby Chien; Editing by Louise Heavens)

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