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McDonalds to raise prices in 2011

by Jorge Hernandez on January 25, 2011

Despite posting a 2.1 increase in profit during the fourth quarter of 2010, McDonalds announced that it plans to raise its prices in the near future as a way to cover rising commodity costs. Though the company has yet to say which items will see the increases, they expect costs to rise between 2 and 2.5 percent in the United States and between 3.5 and 4.5 percent in Europe, Reuters reports.

McDonalds is expecting to increase prices in the 10 commodities that account for around 75 percent of its food, and likely will not be the only one in the fast food business jacking up prices, as the cost of food is rising around the globe. The restaurant's CFO, Pete Bensen, said that the company would implement the raises "where it makes sense," and that they would offset some, but not all, of the increase cost of production

Analysts say that McDonalds will be cautious not to turn away consumers, especially when people are looking to save money anywhere possible. Additionally, they likely will not suffer much loss in business because they will be able to make smaller increases than rivals such Burger King and Wendy's due to their larger size and influence.

"They're large enough to put some pressure on their suppliers and they also will, through direct price increases or perhaps changing portion sizes, try to pass some of it on to consumers," industry insider Peter Jankovskis told the news source.

McDonalds experienced an increase in profit recently thanks to an ambitious campaign to provide customers with a more varied menu. The restaurant currently features a number of items not typically offered in other fast food establishments such as lattes, frappes and smoothies.  

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