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 McDonald`s to rethink price after sales fall
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McDonald's to 'rethink' prices after sales fall  

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Description:

McDonald's has been hit by its first fall in global sales since the start of the pandemic in 2020 as lower income consumers struggle with the cost of living. The boss of the fast food giant says the poor results are forcing them into a comprehensive rethink on the prices they charge. Here in the UK the price of a Big Mac has gone up by almost 2/3 since 2020. McDonald's shares rose as the firm promised to develop cheaper meal deals. Michelle Fleury has been following the story.

Michelle Fleury: No amount of special source can make higher prices more palatable as McDonald's has found out sales at the burger giants spotted consumers around the world shying away from the higher cost of burgers, fries, and soft drinks. Even the CEO admitted it was too expensive. 

Chris Kempczinski: Beginning last year, we warned of a more discriminating consumer particularly among lower income households and as this year progressed those pressures have deepened and broadened.

Michelle Fleury: On a call with investors, McDonald said food labor and paper costs had risen by as much as 40% forcing it to raise prices. But one analyst we spoke to noted that the Golden Arches had been faster on the draw with price hikes than its rivals. 

Sara Senatore: McDonald's pricing increases have been faster than the rest of the industry. Consumers are savvy, they're aware of that and we think some of what needs to happen is that gap needs to narrow after having the $1 $2 $3 Dollar Menu really kind of disappear over the last couple years. They need to have something where people have a sense that there is consistent everyday value. Price certainty matters a lot. 

The fast food giant is working on fixes like extending its $5 meal deal into August at some U.S. restaurant that sent its share price higher. More and more restaurants from McDonald's to Taco Bell are launching value meals to win over budget conscious consumers. 

Thanks to Michelle there. 

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Questions:

1. What has hit McDonald's for the first time since the beginning of the Covid-19 pandemic? 

2. Mention what initiated their price increase. What fixes does the company say they are working on to win back budget conscious consumers? 

3. According to analyst Sara Senatore, what has been significantly notable with McDonald's pricing strategy? 

4. Why does price certainty matter a lot? Do you personally feel like fast food buys are now a luxury? 

5. Talk about how inflated the prices of goods are in your country. Do you find the rising prices justifiable?

 

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2024-08-05 ¿ÀÈÄ 3:31:47
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