McDonald's Didn't Lose Its Sales Mojo Despite Price Hikes
Some companies are able to raise prices without losing business. The New York Times reports Coca-Cola and Chipotle Mexican Grill saw improved earnings despite increasing costs for customers; At Chipotle, prices are nearly 15% higher than last year. McDonald's was also able to increase prices on menu items while keeping customers coming back for more: McDonald's recorded a 6.1% sales increase when compared to sales numbers recorded at the same time last year.
Reuters attributes McDonald's profit increase to not only the hike in menu prices but also the fact that customers are looking for meals at affordable prices, particularly as inflation rates continue to escalate. To account for escalating operational and hiring costs, McDonald's raised fares on fast food items by 10%. Prices of fast food often vary from city to city, as labor and living costs can influence the numbers customers see on a menu, yet customers are still determined to order burgers and fries.
Maximizing orders and profit
Chief Financial Officer Ian Borden credits the company's continued success to the brand's position as an affordable, value-driven restaurant option, while CEO Chris Kempczinski shares one of the company's strategies: Maximizing digital orders as the recession takes its toll (per Reuters).
The company's Happy Meal for adults, made in tandem with Cactus Plant Flea Market, helped spur the most digital transactions ever recorded in one week in McDonald's biggest market: The United States. Teaming up with the streetwear brand was a success, and McDonald's recorded an increase in foot traffic in stores.
According to the McDonald's website, Dick and Mac McDonald opened the now-famous drive-in restaurants after a failed attempt in the movie business. That was back in 1948, and the first hamburgers would set customers back 15 cents. The success of the cheap burgers resulted in an expanding franchise effort, and the rest is fast-food history.