McDonalds to hike prices in India

McDonalds to hike prices in India

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Popular fast food giant McDonald’s India might soon hike its prices in the country. This will be the second hike in 2013 and will be done due to the unpredictable inflation and the economic slowdown. The company is expecting to temper the demand growth for at least the next 7 months.

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On May 7, 2013, the company stated that it would hike the prices by 5 to 6 percent. Previous 5 percent hike was done as the government had increased the service tax rate in February 2013. Amit Jatia, the vice-chairman of Hardcastle Restaurants which owns McDonald’s franchise for south and west India said, “There is pressure and it’s a tough environment, no doubt. But inflation is at 8-10 percent so we have to hike our prices”.

It is noticeable that the consumer spending has hit a rough patch in the past three quarters. This situation occured due to increase in food prices and meager salary hikes and also the slowest economic growth in a decade which has affected the appetite of buying clothes, cars and eating out.

The fast food chain added that its same-store sales have remained under pressure and even though they would continue to grow, the increase would not be at 22 percent that was achieved in the financial year which ended in March 2012.