McDonald’s has raised its prices in China for the second time in 2023, sparking widespread debate among consumers on Chinese social media. The latest price increases — from set meals to burgers and snacks — come amid higher operating costs, according to the fast-food giant.
According to reports in domestic media, the price hikes — averaging around 3% — were implemented earlier this week. While the prices of various set meals, burgers, and snack items rose by 0.5 to 2 yuan, the price of one of McDonald’s most popular budget options, the “match 1+1 as you like” meal, remains at 13.9 ($2) yuan.
Earlier this year, McDonald’s China raised the price of this same set meal from 12.9 yuan, citing various cost increases in the wake of the pandemic.
“Along with changes in operating costs, we regularly evaluate and adjust the price structure,” a customer service manager of McDonald’s China told Sixth Tone. He added that the specific product price adjustments differ by location, and advised customers to check the prices listed in local stores or on digital ordering platforms.
Before McDonald’s officially announced the price adjustments, reports in domestic media led to a heated debate on the microblogging platform Weibo. A hashtag related to the impending price hike climbed to the top of Weibo’s trending list on Tuesday, drawing at least 360 million views.
“It’s like boiling a frog in warm water. If you increase the price by one or two yuan at a time, it’s acceptable. However, two or three hikes later, the price will have changed from single digits to more than 10 yuan,” stated one popular comment.
Online, many also said that they would switch to more economical alternatives, such as Tastien, a domestic burger brand gaining popularity for its appeal to Chinese tastes.
At Tastien, a regular spicy chicken burger is priced at 14.5 yuan, significantly lower than the 24.5 yuan charged for a McSpicy Chicken Fillet Burger at McDonald’s, as per the prices listed on McDonald’s online ordering application.
“The cost of the entire food and catering supply chain is rising at present … So from this perspective, McDonald’s price hike is based on the cost pressure,” Zhu Danpeng, a food industry analyst, told Sixth Tone, while acknowledging that the cost of other food categories, including beverages, was on the decline.
McDonald’s price hikes are not exclusive to China, with the company also introducing costlier menus in other countries, including Japan and the U.S. “Our average pricing level in the U.S. business for the full year will be just over 10%,” Ian Borden, the company’s CFO, stated in a late October earnings report.
According to McDonald’s third-quarter financial report, while revenues during the period saw a year-on-year increase of 14%, with a total of $6.692 billion, total operating costs and expenses surged to over $3.483 billion, a year-on-year increase of 12%.
Despite the widespread dissatisfaction over the recent price hikes, Zhu indicated that the majority of McDonald’s consumers, predominantly young Chinese, may not be overly sensitive to these price changes and therefore unlikely to significantly impact the company’s business.
On Dec. 6, McDonald’s CEO Chris Kempczinski said in an interview that the company plans to increase the number of restaurants in China from 6,000 to 10,000 by 2028. Citing the potential for new stores, sales growth, and improved profits, he said he was “very optimistic about the prospects for China’s business.”
Editor: Apurva.
(Header image: A McDonald’s restaurant in Shenyang, Liaoning province, July 1, 2023. VCG)
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