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McDonald's $1 Drinks Are Not Inflation Proof: Some Franchises Raising Prices

Stock Markets Jul 03, 2022 17:40
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© Reuters. McDonald's $1 Drinks Are Not Inflation Proof: Some Franchises Raising Prices

The long-standing any-size-soda-for-a-buck promotion at America’s favorite fast-food restaurant may be nearing its end.

What happened: As restaurant owners navigate rising inflation and supply chain constraints, some McDonald's Corp (NYSE: NYSE:MCD) franchisees are voting to raise the price of drinks in their establishments.

According to The Wall Street Journal, McDonald’s franchises from Illinois to Tennessee have raised the prices of drinks between 39% and 69% — with more franchises expected to join soon.

The Journal reports that 16 of McDonald's 56 U.S. restaurant cooperatives voted to promote the company's value menu rather than dollar beverages, allowing them to move away from the promotion.

Why it matters: Franchisees of McDonald's restaurants maintain complete control over their pricing and rely on Deloitte to make pricing recommendations based on local expenses. Prices may also be determined by a restaurant's desire to attract more people through meal deals.

Also read: Labor Market Is Tight Yet Layoffs Surge As Tesla, Coinbase (NASDAQ:COIN), Netflix (NASDAQ:NFLX) And Others Cut Staff

While the cost of McDonald's beverages may be only starting to rise in the US, a Canadian TikTok user noticed increasing prices as early as May.

@seaairuhg $1 for a small?? #mcdonalds #canada #fyp ♬ original sound - sierra

“That depressing moment when you realize dollar drink days are finally ruined by inflation,” the text overlaid atop the video says.

According to the McDonald’s website, drinks still fall under the Dollar Menu, but a disclaimer reads, “Prices and participation may vary. Cannot be combined with any other offer or combo meal.”

Price action: Shares of McDonald's climbed 2.46% on Friday to close at $252.96, according to data from Benzinga Pro.

Photo: Courtesy of Eric Lewis on Flickr

© 2022 Benzinga.com. Benzinga does not provide investment advice. All rights reserved.

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McDonald's $1 Drinks Are Not Inflation Proof: Some Franchises Raising Prices
 

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