A consulting firm that advises McDonald’s franchisees is recommending steeper price increases this year than it has in the past, according to documents from a presentation to restaurant owners in February, reported Crain’s Chicago Business.
Price hikes have been a key driver of sales growth for the chain, and bigger boosts would bring some relief to franchisees squeezed by higher food costs and expenses associated with McDonald’s push into specialty coffees. But raising prices during a recession could send cost-conscious customers running to rivals.
To keep store traffic high during the downturn, Oak Brook-based McDonald’s Corp. has emphasized its Dollar Menu and rolled out a series of low-price promotions. It collects royalties based on total sales volume from franchisees, who bear the brunt of profit pressures from rising expenses and promotional pricing.