As anyone that got above a C in Econ101, raising the cost of labor and importing goods was going to be passed on to the consumer. No matter the business, owners are not going to just eat that loss in profits. McDonald’s is no different.
So, the fast food giant is doing what most every business is doing — raising prices.
The first victim is items on the Value Menu.
As reported by the Wall Street Journal, MickeyD’s is having a staffing issues and is trying to hire enough staff to operate under regular hours but is also facing a 10% increase in wages and a 4% increase in food and paper costs due to the supply chain issues.
Transportation Secretary, Pete Buttigieg, said that the supply issues could extend until next year.
He recently told CNN that “many of the challenges we’ve been experiencing this year will continue during next year,” and that the Biden-Harris administration is evaluating “both short-term and long-term steps” to fix the problem.
McDonald’s did recently announce that sales rose 12.7% in the third quarter and 10.2% over the two years, according to its latest report.
That said, the company also anticipates at least a 6% increase this year in its menu prices.
In its quarterly report, the company said that U.S. sales grew by 9.6% compared to a 4.6% growth in a year-over-year comparison.
All of those numbers check out with the basic econ principle proposed above.
McDonald’s sales are up, but so are the costs… so, to offset the cost it will increase price.
Econ101 is 101 for a reason.
The ‘raise’ their employees got is immediately worth less than previously made with the rise in prices as well as inflation happening on all goods and services.
