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Say Bye to the Dollar Menu, McDonald’s Raises Prices to Offset Supply and Workers Shortages

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McDonald’s is raising the prices of its menu items in an effort to offset wage increases and supply costs amid a deepening labor shortage in the supply chain crisis.

As reported by the Wall Street Journal, the fast-food chain is having a difficult time trying to hire enough staff to operate under regular hours due to a 10% increase in wages and a 4% increase in food and paper costs.

Although overall comparable sales rose 12.7% in the third quarter and 10.2% in two years according to its latest report, McDonald’s anticipates at least a 6% increase this year in its menu prices.

The quarterly report indicates that its U.S. sales grew by 9.6 percent compared to a 4.6 growth last year during the same period of time.

The chain attributes such growth to price increases to its menu, an increase in the number of large order sizes, the marketing of its chicken crispy sandwich and the celebrity endorsements through its Famous Orders platform.

Its report also attributes the growth in digital channels to those factors, which benefited from the launch of the company’s loyalty program, called “MyMcDonald’s Rewards.” Comparable sales increased 14.6% over two years.

In addition, McDonald’s report shows a more solid operating performance as a result of fewer restaurant closures and the easing of COVID-19 restrictions compared to the prior year.

McDonald’s vs the supply crisis

The news comes against the backdrop of a supply chain crisis affecting the economy, which is already generating fears of possible product shortages at Christmas time and according to the Transportation Secretary, Pete Buttigieg, could extend until next year.

Buttigieg recently told CNN: “many of the challenges we’ve been experiencing this year will continue during next year,” and that the Biden administration is evaluating “both short-term and long-term steps” to address the problem.

Some port closures, a lack of workers in the transportation industry and bottlenecks on ships are some of the problems causing an increase in the prices of goods.

In response to that, the White House announced earlier this month that the Port of Los Angeles and several companies like FedEx, UPS, Target and Walmart would be working around the clock to alleviate some of the supply chain disruptions.

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