Unhappy meal: McDonald's ups prices

A McDonald's hamburger and fries on a table near City Hall in New York.

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Kai Ryssdal: McDonald's has survived the recession better than most other restaurants. Better than most other companies, in fact. The burger chain announced this week it's seen sales rise for 30 consecutive quarters. That's seven and a half years and a whole lotta big macs, fries and cokes. In fact, McDonald's is doing so well some managers are even re-thinking the competition. Not who they are so much, as what they charge.

Chicago Public Radio's Tony Arnold reports.


Tony Arnold: Yeah, sure, there's Burger King and Wendy's and any other international chain of fast food restaurants competing with McDonald's. But if you're running the world's largest hamburger chain, think of your competition as something bigger than the restaurant next door. Think -- the refrigerator.

Peter Benson: The refrigerator started to become a big competitor of ours.

That's Peter Benson, McDonald's chief financial officer, in a conference call with investors. He says McDonald's has done well during the recession, but it's undeniable more people are eating out less. So Benson says the company began looking at how to get people out for meals.

Benson: We started to look also at food at home. What's going on at the grocery stores?

Benson says the restaurant is looking to base its own prices on both its fast food competitors and the supermarket aisles. As a result, McDonald's will be raising prices in the U.S. and Europe.

Peter Saleh analyzes the restaurant industry for Telsey Advisory Group.

Peter Saleh: The price increase will be a very nominal amount that consumers will see on the menu price.

Saleh says given McDonald's history of cheap menu items, the company will be conscious not to raise prices too much. And, he says it's not just the golden arches that's feeling a little more comfortable raising prices now.

Saleh: Are prices going up at McDonald's? Yes. Are prices going up at their competitors? At Wendy's and Burger King? Yes. Are prices going up at the supermarket? Yes.

Saleh says McDonald's is in a secure spot for the near future, especially as the menu continues to expand to include healthier options.

In Chicago, I'm Tony Arnold for Marketplace.

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