Restaurants, food makers wagering on higher prices

    Restaurants and food makers are finding that consumers are willing to pay higher prices, the Wall Street Journal reports.

    Higher prices on foods from Ritz crackers to burritos are helping boost sales and profits for producers and restaurants, with companies like McDonald’s, Mondelez and Chipotle seizing the opportunity to charge more, in part to cover higher costs for ingredients, transport and labor.

    Prices at McDonald’s restaurants in the U.S., for example, have risen by about 2% on average in each of the past several quarters, helping to push up sales overall as guest counts have fallen. The company previously said it’s having new success drawing in guests through some discounts, such as a two-for-$5 value menu.

    Consumers are driving the decade-long national economic expansion, as other sectors including manufacturing and the farm economy are hurt by trade tensions and tariffs. A tight labor market is also leading some companies to raise wages, giving households more to spend.

    Coca-Cola bolstered revenue with higher prices in the U.S. in the second quarter, though volumes were slightly down. PepsiCo’s stronger revenue in its businesses in the U.S. and Canada were driven for the most part by price gains. Dunkin’ Brands Group said sales rose in the quarter as customers ordered more expensive espresso drinks and breakfast bowls that the coffee chain added to its menu over the past year. Chipotle also reported a 10% sales bump driven largely by bigger orders after raising prices last year.

    “We are seeing no resistance,” to the higher prices, Chipotle’s CFO Jack Hartung said in an interview last month. Read the full WSJ story. 

    View Comments