At a Glance:
- McDonald Corp has been saved with the help of price hikes and a new loyalty program.
- The sales have increased by 11.8% with gross revenues of $5.67 billion, surpassing the expectations of $5.59 billion.
- The franchises in Ukraine and Russia are costing $55 million/ month as the company decided to keep the employees on payroll and other infrastructural maintenance.
McDonald Corp has been saved with the help of price hikes and a new loyalty program. After the Ukraine war and COVID-19 lockdowns in China, the company has faced several losses and failed to meet the analysts’ profit expectations.
But after the price hikes and loyalty program, McDonald’s has gained its foothold in the industry and managed to beat the estimates of the quarterly sales and profits. The company has reported a rise of 2% in shares at the Chicago-based franchise.
Increased Menu Prices
Although, the price hike has caused the customers to buy cheaper or fewer McDonald’s items in some areas. Addressing this situation, the CEO Chris Kempczinski said, “In certain parts of the business and certain geographies, there is a little bit of a trade down that we’re seeing that we’re just keeping an eye on. We need to make sure that we continue to have the value be an important part of our proposition.”
The franchises in Ukraine and Russia are costing $55 million/ month as the company decided to keep the employees on the payroll. Also, this includes the cost of landlords and suppliers who are keeping the infrastructure maintained.
McDonald’s is not alone
McDonald’s was one of the firstWestern brands to close its stores in Russia after the Ukraine invasion. After shutting the operations in Russia, McDonald’s lost $100 million on the disposal of inventory in the supply chain. Considering the ongoing Ukraine war, several U.S. restaurant chains have raised the prices to cover the costs of packaging, production, and employee salaries.
The cost of McDonald’s commodities has doubled since the previous quarter in the U.S. and Europe roughly making it 14% higher for this year. Despite this, the sales have increased by 11.8% with gross revenues of $5.67 billion. It has surpassed the expectations of $5.59 billion.