Fast food giant McDonald's is set to raise its prices in the United Kingdom due to the cost shock caused by the Iran war. The new boss of the burger behemoth's UK arm, Lauren Shultz, told the Mirror that a "slight price increase" is on the horizon. While the exact impact remains unclear, she confirmed that the company's Meal Deal and Saver menu items will stay the same. However, a host of other products, including the popular Big Mac, could see price hikes for millions of UK customers.
Price Increases Under Consideration
Lauren Shultz, who took over the UK and Ireland operations last September, explained the company's approach: "Like any business, we have to measure cost pressures with where prices need to go." She insisted McDonald's would remain value for money compared to competitors. "There is a predicted slight price increase," she added, noting that the company is "in deliberations" about when prices would have to rise.
Speaking to BBC Radio 4's Today programme, Shultz elaborated: "We have been operating in a volatile, inflationary industry for years now. With the volatility, though, we are watching where inflation goes. We have long-standing, strong relationships with our suppliers, who have given us a lot of cost certainty. We will likely see some prices go up, but in a small, disciplined way. It is where customers are willing to pay a little bit more."
Recent Price Hikes and Broader Impact
The threat of price rises comes after McDonald's reportedly increased several product prices in January this year, with a single hash brown now costing almost £2 in some areas. Hash browns usually cost between £1.59 and £1.69, a significant jump from their modest price of just 89p in 2019.
McDonald's is just the latest food firm considering price rises due to the cost shock caused by the Iran war. The conflict has driven up not only oil prices but also a number of other commodities linked to the blockade of the key Strait of Hormuz.
The Food and Drink Federation (FDF) estimated that grocery inflation could jump to 9% or 10% by Christmas, even if the conflict is resolved soon. Karen Betts, FDF chief executive, explained: "Energy is embedded in every part of the food system, from agriculture through to the energy used in greenhouses, manufacturers to make food and chill it, and to move it onto supermarkets and the energy they use."
Fuel Surcharge on Bread
In a related development, a fuel surcharge could be added to best-selling bread Kingsmill within weeks because of the Iran war. Maker Allied Bakeries is in early-stage discussions with supermarkets and other retailers about including the conflict-linked levy. The add-on, which sources say could be less than 5p a loaf, is designed to claw back a spike in energy costs for production and transporting bread by road to shops. It will be up to retailers to decide whether they pass it on to customers. An 800g loaf of Kingsmill 50/50 medium soft white bread is currently £1.05.
