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McDonald's

McDonald’s raises Hong Kong prices by 2 per cent, as expert warns more increases from chain may follow this year

Rising rents and costs of raw materials cited

PUBLISHED : Tuesday, 02 January, 2018, 7:20pm
UPDATED : Tuesday, 02 January, 2018, 9:44pm

McDonald’s raised prices at its Hong Kong stores by 2 per cent on Tuesday amid rising costs, in what an industry expert said was a prelude to more of such moves from the world’s largest fast-food chain.

The restaurant line increased its prices in the city by HK$0.60 to HK$1.50 on menu offerings, which include extra-value breakfasts, extra-value meals, happy meals, and some individual food items and drinks.

Rising operating costs from increased rents and higher ingredient prices prompted the move, according to a statement from the company.

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“McDonald’s Hong Kong understands the pressure on citizens from inflation, and did its best to limit the impact on food prices when considering price adjustment,” the company said.

The price rise was relatively milder this year compared with the past two years – in January and December last year, the chain raised prices by 2.3 to 2.5 per cent.

However, Simon Wong Ka-wo, president of the Hong Kong Federation of Restaurants and Related Trades, said there would be more to come from McDonald’s.

“Considering the rise in rents and wages, its overall operating costs should rise more than 2 per cent for the past year,” Wong said. “There is a possibility of gradual price increases in 2018.”

This came after what could be the best year for restaurants in the city since 2012, as the sector saw an upward trend in demand from both local residents and tourists.

“The overall economy was doing well in 2017, and the number of mainland tourists also picked up,” Wong said. “Citizens were more willing to spend on luxury goods and dining.”

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The year-on-year increase in restaurant revenues, which is a major indicator of demand for dining out, rose to 5 per cent in the third quarter of 2017, from 2.6 per cent for the same period in 2016.

The full-year figure is likely to be the highest since 2012, assuming the performance of the fourth quarter – which will be released next month – kept up with the rest of the year.

Jenny Lu, 22, who dines at McDonald’s three times a month on average, said the price increase was “acceptable.”

“I visit McDonald’s not just because it’s cheap. The main reason is convenience,” Lu said. “I eat there whenever I can’t think of anywhere else to go.”

This is the first price increase since McDonald’s sold 80 per cent of its Hong Kong and mainland China business last January to Citic, China’s largest international trust company, and the Carlyle Group, a US private equity firm.

McDonald’s owns 240 outlets in Hong Kong and 2,400 outlets in mainland China.