McDonald's intends to manage inflation by increasing prices frequently but in tiny increments.

McDonald's intends to manage inflation by increasing prices


McDonald's intends to manage inflation by increasing prices

McDonald's Corporation says it intends to raise prices to keep up with inflation, but it will do so in small increments rather than all at once.


The fast-food behemoth said it's monitoring consumer reaction to each of the pricing hikes at the Evercore ISI Consumer & Retail Conference on Thursday.


According to Uswhispers transcript, Ian Borden, McDonald's MCD, -1.89 percent international president, said, "I think we're being very prudent because the landscape certainly has some headwinds in it and, I think, we're being very conscious to ensure that we kind of stay on the side of the consumer as we make decisions through this to ensure those really important fundamentals of our business around value and affordability stay as strong as they can."


"I think what's a little bit remarkable about this set of conditions is that food-at-home inflation is actually expanding faster than food-away-from-home inflation right now in a lot of places," Borden said.


"As a result, when some customers would ordinarily go from eating out to eating at home," he said, "I believe we may observe some distinct behaviours just because of the various speeds across some of the commodities or basket of goods that individuals would purchase."


When Walmart Inc. WMT, -0.54 percent released its earnings last month, pricing was also a factor. The retail behemoth, which is a key supplier of food at home for many Americans, is assuming responsibility for keeping things within buyers' budgets.


"We need to do more to keep costs low, and where we see the switching from brands to private brands, we'll continue to watch that for a group of customers," John Furner, CEO of Walmart U.S., said on the earnings call, according to FactSet. "But we've got to all work harder to keep prices low for the American consumer."


Consumers are switching to private label for commodities like dairy and bacon, according to Walmart.


J.M. Smucker Co. SJM, 0.40 percent, which just announced earnings, mentioned the pricing changes it made. Retailers such as Walmart, according to Credit Suisse, may begin to push back on this in order to sustain value.


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