Question: Read article and answer the question. Burger giants same-store sales surpass pre-pandemic levels as Covid-19 restrictions loosen in major markets. McDonalds Corp. MCD +2.80% is
Read article and answer the question.
Burger giants same-store sales surpass pre-pandemic levels as Covid-19 restrictions loosen in major markets.
McDonalds Corp. MCD +2.80% is raising menu prices to keep pace with rapidly growing costs, the company said, with wages alone up at least 10% so far this year at U.S. restaurants.
The Chicago-based burger giant is struggling to recruit enough workers to serve customers as quickly as possible and keep its stores open at full hours, even as the chain offers higher pay, executives said.
Average wage increases at McDonalds U.S. restaurants have continued from the companys second quarter, when executives reported they were up around 5% domestically during the period. Higher wages, including an average 15% increase this year at company-owned U.S. restaurants, is helping, but not as much as anticipated, executives said.
Certainly I was hoping and expecting that we were going to see the situation improve maybe a little bit more quickly than whats materialized, chief executive Chris Kempczinski told investors Wednesday.
The Big Mac maker is also paying more for paper, food and other supplies, executives said. McDonalds expects its commodity costs for the year to rise by 3.5% to 4%, up from the 2% they grew earlier in 2021, executives said.
Those higher costs are making their way to consumers, as McDonalds executives said they expect U.S. prices to be up about 6% this year compared with last year.
Companies across the globe are raising consumer prices in response to growing costs spanning distribution and freight to fuel and food. U.S. inflation in September remained at its highest rate in more than a decade, Labor Department data showed.
Starbucks Corp. said Wednesday it will increase average U.S. employee pay to $17 an hour, up from roughly $14 an hour currently. Baristas who have been with the coffee chain for two or more years will get pay increases of up to 5%, Starbucks said, and those with five or more years on the job will be eligible for a raise of up to 10%.
Many restaurants are raising menu prices to offset higher wages for cooks and servers and rising costs for meat, packaging, vegetable oil and other commodities. Chipotle Mexican Grill Inc., Del Taco Restaurants Inc. and Chilis owner Brinker International Inc. are among the chains that told investors in recent weeks that they have increased prices to help cover costs.
McDonalds said Wednesday that global same-store sales in the quarter ended Sept. 30 increased 10.2% compared with the same period before the pandemic. U.S. same-store sales were up 14.6% compared with the equivalent 2019 period.
McDonalds said that bigger order sizes and higher prices increased its revenue in the U.S., as did its new crispy chicken sandwich and celebrity-endorsed meals. Diners are placing more to-go orders and buying for larger groups than before the pandemic, contributing to higher sales per customer, executives said.
We are still selling more sandwiches, were still selling more fries, Mr. Kempczinski said.
McDonalds reported quarterly net income climbed 22% from the same quarter a year earlier, rising to $2.15 billion. Sales totaling $6.2 billion increased 14% from the previous years period. Adjusting for one-time items, McDonalds said it earned $2.76 a share.
The companys sales and earnings topped analysts expectations. McDonalds shares rose 2.2% to $241.57 in morning trading.
McDonalds slightly increased its projected sales across its restaurants for 2021. It also anticipates opening more restaurants globally, mainly in China and other international markets. In the U.S., supply-chain backlogs for kitchen equipment and permitting delays are postponing some new restaurant openings until next year, the company said.
McDonalds, the worlds biggest burger chain, said that it had fewer Covid-19-related restaurant closures over the past quarter in major markets such as Canada, France and Germany, helping McDonalds sales in those countries. Still, vaccine health pass requirements in France and quarantine orders in Australia, for example, made operations more challenging, the company said.
In the U.S., roughly 3,000 McDonalds dining rooms remain closed in areas with high Covid-19 infection rates, or roughly 20% of locations. U.S. sales remain elevated at drive-throughs, online and through delivery, even after reopening a locations dining room, executives said.
McDonalds acquired a string of technology startups prior to the pandemic to develop systems such as voice-recognition ordering at drive-throughs. The company said Wednesday it was selling a technology lab it developed in the Bay Area to International Business Machines Corp. IBM +1.52% to better advance that work.
Q: How was COVID impact product pricing of McDonald's?
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