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McDonald's raises prices in China

By Diao Ying (China Daily)
Updated: 2008-06-26 09:43

McDonald's, the world's largest fast food chain, raised its prices in China on June 25, for the second time this year, following measures to increase prices in January.[Asianewsphoto]

There's no escaping rising inflation - signs of it are everywhere. The latest sign could be in your meal at a fast-food outlet.

McDonald's, the world's largest fast food chain, yesterday raised its prices in China, for the second time this year, following measures to increase prices in January.

The US group is not alone in its decision. Many Western food chains are now increasing prices on their menus in China.

Its major competitor, KFC, adjusted the prices of some of its products in March. And Pizza Hut, a pizza chain under the Yum! Brands Inc, which is also the parent company of KFC in China, raised the price of its pizza and salad this month.

The groups give similar reasons for raising prices.

They say it is the high price of raw materials, food, labor cost, and the recent skyrocketing oil price, that lead to the move.

Gu Hua, a spokesman for McDonald's, said the company has so far only decided to raise prices in China and did not say if there were plans for further changes globally.

Consumers, of course, are no strangers to rising prices. Many said McDonald's price adjustment will not influence their decision to eat at a particular outlet as prices for daily necessities have also been on the up.

"They did not increase the price much," said a customer at one McDonald's outlet in Beijing. "Plus, everything is getting more expensive, so it is understandable."

Items on McDonald's menus have risen from between 0.5 to 1.5 yuan, depending on the product.

Industry experts said profit margins for fast food groups have been shrinking since last year due to a substantial increase in operation costs.

"The price increase for foreign fast food chains makes sense," said Qiao Jie, spokesman for China Cuisine Association. "Many Chinese restaurants have raised prices already." Some Chinese fast food chains, such as Kungfu, are also reportedly planning to adjust the prices of some of its products as a result of the cost pressure.

Food prices account for one-third of the consumer price index, which went up by 7.7 percent year-on-year last month, according to the National Bureau of Statistics. Food prices alone increased 19.9 percent year-on-year in May, compared with 22.1 percent in April.