McDonaldâ€™s Dollar Menu may have to be renamed because they plan to raise prices in 2011. The reason Mickey Dâ€™s gives for the increase is the rising cost of commodities.
McDonaldâ€™s to Raise Prices in 2011 Ahead of Commodities Increase
McDonaldâ€™s thinks that the price of commodities will rise 2-3% for 2011, and that is a big cost to absorb. McDonaldâ€™s has chosen to be proactive and plan a price increase instead. McDonaldâ€™s has been able to avoid price increases since the end of 2009, so it is pretty good to have made it this long.
One of the reasons that McDonaldâ€™s has remained successful is because theyâ€™ve given U.S. consumers affordable options during the tough economic times of the past few years. McDonaldâ€™s has actually gained market share.
Until the prices increase, McDonaldâ€™s is focusing on promotions like Monopoly as well as its newly reintroduced McRib sandwich. Itâ€™s interesting that McDonaldâ€™s is choosing now to raise prices when their stock is up 25.7%, and it has outperformed its earnings estimates. Is it possible that McDonaldâ€™s could stall their growth if the price increases are too steep? Probably not â€“ McDonaldâ€™s has long been successful at luring in customers will all types of promotions and new menu items. Will you still eat there when they raise prices?
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