Higher prices drive McDonald's revenue to $31 billion in 2021
Sign up now: Get ST's newsletters delivered to your inbox
In the US, McDonald's restaurant sales in the fourth quarter grew 13.8 per cent from a year earlier.
PHOTO: AFP
NEW YORK (NYTIMES) - Price increases on Big Macs, Chicken McNuggets and other food items helped McDonald's more than offset sharp rises in food and labour costs and propelled the company's revenues for 2021 to the highest level since 2016.
McDonald's said in a financial report on Thursday (Jan 27) that global revenues topped US$23.2 billion (S$31.4 billion) last year, a 21 per cent jump from 2020 and the highest level since reaching US$24.6 billion in 2016. Profit soared 59 per cent from a year earlier, to US$7.5 billion.
In the United States, comparable McDonald's restaurant sales in the fourth quarter grew 13.8 per cent from a year earlier - the highest increase ever - from a combination of menu price increases, promotions around the McRib and the Crispy Chicken Sandwich, and the company's digital loyalty programme, McDonald's said.
On a call with Wall Street analysts, its chief executive and president Chris Kempczinski deemed 2021 a "banner year for McDonald's, despite the continued disruptions" of the pandemic.
Still, executives warned that many of the inflationary pressures that the chain felt in 2021 would persist or even increase in the first half of this year.
Last year, the price of food and paper costs grew about 4 per cent, while wages increased by percentages in the low teens. Executives said they expected food and paper costs to continue to increase in the first half of 2022 in the US.
To offset those costs and maintain profit margins, McDonald's, like other fast-food chains, increased menu prices by about 6 per cent last year.
While individual franchise owners make decisions about how much prices should increase, McDonald's executives said there was a lot of discussion and examination around further price increases and the restaurant chain's desire to still be seen as a good value to its customers.
"That's where we keep a really close eye as we take pricing, is how customers are reacting, both in terms of customer research and how they view value and whether they're still coming in from a transaction standpoint," said Mr Kevin Ozan, the chief financial officer for McDonald's.
