Price increases on Big Macs, Chicken McNuggets and other food items helped McDonald’s more than offset sharp rises in food and labor costs and propelled the company’s revenues to the highest level since 2016.
McDonald’s said in a financial report on Thursday that global revenues for 2021 topped $23.2 billion, a 21 percent jump from 2019 and the highest level since reaching $24.6 billion in 2016. Profit soared 59 percent from a year earlier, to $7.5 billion.
In the United States, comparable restaurant sales in the fourth quarter grew 13.8 percent from a year earlier — the highest increase ever — from a combination of menu price increases, promotions around the McRib and the Crispy Chicken Sandwich, and the company’s digital loyalty program, McDonald’s said.
On a call with Wall Street analysts, Chris Kempczinski, the chief executive and president of McDonald’s, deemed 2021 a “banner year for McDonald’s, despite the continued disruptions” of the pandemic. The company’s stock was up slightly in midday trading.
Still, executives warned that many of the inflationary pressures that were felt by the restaurant chain in 2021 would persist or even increase in the first half of this year. Last year, the price of food and paper costs grew about 4 percent, while wages increased by percentages in the low teens. Executives said they expected food and paper costs to continue to increase in the first half of 2022 in the United States.
In order to offset those costs and maintain profit margins, McDonald’s, like other fast-food chains, increased prices for menu items by about 6 percent last year. While individual franchise owners make decisions about how much prices should increase, McDonald’s executives said there was a lot of discussion and examination around further price increases and the restaurant chain’s desire to still be seen as a good value to its customers.
“That’s where we keep a really close eye as we take pricing, is how customers are reacting, both in terms of customer research and how they view value and whether they’re still coming in from a transaction standpoint,” said Kevin Ozan, the chief financial officer for McDonald’s.
