McDonald’s Food Prices Rise — in California

By Douglas A. McIntyre Published Oct 31, 7:02AM EDT

Follow 24/7 Wall St. on Google

This post may contain links from our sponsors and affiliates, and Flywheel Publishing may receive compensation for actions taken through them.

McDonald’s Food Prices Rise — in California — © yaoinlove / iStock Editorial via Getty Images

Most retailers must be unhappy with a new law that brings the minimum wage up to $20. McDonald’s Corp. (NYSE: MCD | MCD Price Prediction) plans to offset that with higher menu prices. It is too early to say whether any customers will decide McDonald’s food prices have increased too much. (These are the 30 longest-running restaurant chains in America.)

Management at the huge fast-food company says the hike in McDonald’s food prices will be in the mid to high single digits. CNBC points out these price increases are brought on by higher prices of ingredients and now labor prices. Management also commented that people with annual incomes below $45,000 often find these jumps too expensive.

For some odd reason, McDonald’s CEO Chris Kempczinski said, “We believe we’re in a better position than our competitors to weather this, so let’s use this as an opportunity to actually accelerate our growth in California.” That supposes the $20 per hour pay will hurt other fast-food companies more than the Golden Arches.
[nativounit]
McDonald’s is large enough to swallow the higher costs without a major hit to its financials. In the most recently announced quarter, its revenue was $6.7 billion. Its net income was $2.1 billion. “With global Systemwide sales growth of 11%, our third quarter results reflect our position of strength as the industry leader,” Kempczinski said.
[recirclink id=1172911]
The California wage problem is not a problem. That is, if it does not spread more widely.

About the Author Douglas A. McIntyre →

Douglas A. McIntyre is the co-founder, chief executive officer and editor in chief of 24/7 Wall St. and 24/7 Tempo. He has held these jobs since 2006.

McIntyre has written thousands of articles for 24/7 Wall St. He is an expert on corporate finance, the automotive industry, media companies and international finance. He has edited articles on national demographics, sports, personal income and travel.

His work has been quoted or mentioned in The New York Times, The Wall Street Journal, Los Angeles Times, The Washington Post, NBC News, Time, The New Yorker, HuffPost USA Today, Business Insider, Yahoo, AOL, MarketWatch, The Atlantic, Bloomberg, New York Post, Chicago Tribune, Forbes, The Guardian and many other major publications. McIntyre has been a guest on CNBC, the BBC and television and radio stations across the country.

A magna cum laude graduate of Harvard College, McIntyre also was president of The Harvard Advocate. Founded in 1866, the Advocate is the oldest college publication in the United States.

TheStreet.com, Comps.com and Edgar Online are some of the public companies for which McIntyre served on the board of directors. He was a Vicinity Corporation board member when the company was sold to Microsoft in 2002. He served on the audit committees of some of these companies.

McIntyre has been the CEO of FutureSource, a provider of trading terminals and news to commodities and futures traders. He was president of Switchboard, the online phone directory company. He served as chairman and CEO of On2 Technologies, the video compression company that provided video compression software for Adobe’s Flash. Google bought On2 in 2009.