According to reports, hard-hit Mcdonald’s is forced to raise prices as employee wages rise; due to labor shortages, some restaurants will close, and other locations will have slower service.
According to the Wall Street Journal, the golden arches are raising menu prices to combat the rapidly rising cost of supplies and wages. The company had increased salaries by at least ten percent this year, the report indicated.
The report continues with the increased cost to the company for paper, food, and other supplies, with the commodity cost expected to rise anywhere between 3.5 and 4 percent.
Executives said, unfortunately, the U.S. prices are up roughly six percent from last year, causing the trickle down to the consumer.
The Wall Street Journal reported:
McDonald’s 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.
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McDonald’s, the world’s 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 McDonald’s 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 McDonald’s 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 location’s dining room, executives said.
According to Chief Executive Chris Kempczinski said, “Certainly I was hoping and expecting that we were going to see the situation improve maybe a little bit more quickly than what’s materialized.”
Additionally, even with higher wages, McDonald’s claimed to struggle to find workers able to “serve customers as quickly as possible and keep its stores open at full hours.”
Business Insider reported that due to the inability to find workers, “Restaurants have been cutting their hours” and are “expected to remain short-staffed well into 2022.”
Kempczinski said the labor shortage is “putting some pressure around speed of service,” according to Business Insider, the restaurants were “down a little bit on speed of service over the last year-to-date.”
“Some McDonald’s restaurants have been shutting their dining rooms, too, like one in North Carolina that said it couldn’t find enough staff to operate as usual,” Business Insider added.
“That’s also a function of not being able to have the restaurants fully staffed,” Kempczinski said.