mcdonald's-faces-wage-and-commodity-hikes

McDonald's faces wage and commodity hikes

Published on 27 Jan. 2022 at 18: 45Updated 27 Jan. 2021 to 18: 09

If the end of 2021 and the beginning of 2021 were not as serene as McDonald’s ​could wait for it, the American brand owes it not only to Covid and its variants. The effects of labor shortages, which led to wage increases in the United States, and the increase in the cost of raw materials weighed heavily.

Turnover for the last quarter certainly increased by 18% , driven by an increase in menu prices in its country of origin and by “solid operational performance”. With also a context of opening of establishments more favorable than at the end of 2020 in countries such as France, the United Kingdom, Italy and Germany. Earnings per share, on the other hand, were below market expectations.

Increased by 21 % Sales

Over the whole of 2021, overall sales, including franchisees, increased by 21 % compared to the year if particular from 59, to 112,5 billion dollars. The consolidated turnover of the group reached, for its part, 23,2 billion (+ 23%). Over two years, on a comparable basis, it increased by 8%.

Outside its domestic scope, the British and Canadian markets have always been strong, even in the midst of the pandemic, driven by fewer restrictions. “France and Germany are still in a recovery register”, comments the group’s financial director, Kevin Ozan.

The annual operating result progressed, meanwhile, almost twice as fast as the turnover, to 10,36 billion (+ 41%). While the net profit increases by 59%, to 7,54 billion.

Among the successes displayed by the brand, alongside the chicken-based offers which are visibly popular with customers, is the new loyalty program. “Consumers are very happy with it. It generates an attendance of more than 10 additional %”, welcomes the CEO, Chris Kempczinsky. It also helps to give a serious boost to online sales.

Another line of attack, in parallel with price increases which have reached some 6% across the Atlantic: the proper use of promotions. “You shouldn’t make crazy discounts, but target them. In times of inflation, consumers are particularly attentive to good value for money,” remarks the boss.

Fair balance

After two years of pandemic, it is also a question of focusing more than ever on products well known to a public in search of

references and comfort.

The brand expects to face a continuation of rising costs, from ingredients to packaging. After reaching 3.5% to 4% in the United States in 2021, it should at least double this year in the country but be less strong in international. The right fit between the impact of these increases and what is acceptable to consumers will be a key issue for the year.

The string, which is approximately 45. establishments, targets some 1.400 additional restaurants in the world in 2021.