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Home    Leading fast food company in the UAE considers increasing prices     Details
 
Leading fast food company in the UAE considers increasing prices
29/04/2008

Dubai: The cost of a Big Mac along with its brethren may increase as parent McDonald's deals with rising global food prices, transportation and living costs, along with a weaker dollar.
Rafic Fakih, managing director of McDonald's UAE, told the press at the second launch of its Open Door Initiative that the company may have to raise prices to offset the cost of doing business.
"Costs have risen 30 per cent since last year. The food cost is only one element to business. There is the cost of transporting the goods, real estate (among others)," he said. "Right now we're operating at squeezing point."
McDonalds UAE imports most of the ingredients and materials used to make its burgers, salads and other products from countries as far away as Sri Lanka and Malaysia.

The weaker dollar, which the UAE dirham is pegged to, has increased the price of goods in other countries. The cost to ship the goods to the UAE has also increased because of oil prices have increased in consequence. Food prices have also gone up due to a global food shortage brought on by drought in Australia and increased demands in China and India.
On top of that, operational costs for McDonald's UAE have increased, as it has to pay rent for 50 out 52 branches it operates. The other two branches are in premises the company owns outright.
Despite the squeeze, Fakih said the company has not applied for price increases to the Ministry of Economy, adding they were still studying the issue. He refused to speculate on when or how much the increase would be.
"We are hoping the prices will go down because we don't want to hurt our customers," he said.
He added McDonald's had not increased their prices since 2006.
This is not the first time a fast food company in the UAE is considering increasing its prices. Last month, Kentucky Fried Chicken, Pizza Hut, Southern Fried Chicken and Hardee's increased their prices by as much as 30 per cent, citing rising operational costs.

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