McRib boosts McDonald's sales, but will the price of a bite go up this year?(Read article summary)
McRib sandwiches and other new items on the McDonald's menu brought in more customers, boosting boost 4th quarter profits. But price hikes loom. Will they hit the McRib?
McDonald's Corporation, the world's biggest hamburger fast food chain restaurant, saw 4th quarter 2010 sales and profits rise thanks to the McRib, Carmel Mocha drinks, and some other new items on the menu. Holding the line on prices helped too, according to company officials.
But customers may see price hikes later this year.
McDonald's officials cited the new and improved menu as a key reason for ringing up higher sales in their 32,000 stores worldwide. Along with the Angus burger wrap, McRib, and ther"McCafe" coffee products (launched to compete with Dunkin' Donuts and Starbucks), the fast-food chain also added some healthier items, including fruit smoothies and oatmeal for breakfast. The changes have left their rivals struggling to come up with a better menu.
“During 2010, we continued our efforts toward becoming our customers' favorite place and way to eat and drink—and customers rewarded us by visiting our restaurants more often," said McDonald's Chief Executive Officer Jim Skinner in a company statement. "As a result, we generated strong sales and delivered profitable market share growth, along with higher global revenues, operating income and earnings per share.”
McDonald's CEO Jim Skinner said in a statement that in 2011 the company plans to use about half of its $2.5 billion in capital spending to open about 1,100 new restaurants. The rest will be invested in existing locations.
However, the company is expecting to see the cost of ingredients to rise as much as up to 2.5 percent in the US this year. That will prompt hikes on some menu items.
“As commodity and other cost pressures become more pronounced as we move throughout the year, we will likely increase prices to offset some, but not necessarily all, of these cost increases,” McDonald’s chief financial officer Pete Bensen told Chicago Breaking Business in a conference call with reporters.