McDonald's ( MCD) Company Profile: Oak Brook, Ill.-based McDonald's franchises and operates McDonald's restaurants in the food service industry. The company and its franchisees purchase food, packaging, equipment and other goods from numerous independent suppliers. McDonald's said it anticipates needing to raise prices on some of its offerings this year in order to offset rising ingredient costs, Chief Financial Officer Peter Bensen said on a conference call with analysts following its recent earnings release.
McDonald's anticipated that costs will rise between 2% and 2.5% this year in the U.S. and between 3.5% and 4.5% in Europe. The U.S. Department of agriculture said meat prices could increase by as much as 3.5% this year. Around 10 commodities make up about 75% of McDonald's ingredient costs, the Golden Arches said in January -- Beef, chicken, pork, bread and milk products, paper, cola, ketchup and other sauces, and fruits and vegetables top McDonald's ingredient list. Benson said McDonald's would "raise prices where it makes sense" but would carry some of the higher costs itself, rather than passing it all on to consumers, many of whom patronize McDonald's for its everyday low-cost food offerings. McDonald's raised prices in China last year by as much as 1 yuan (15 cents) at more than 1,200 of its restaurants to offset higher commodity costs in the region.