McDonald’s, Coca-Cola Jump as Consumer Price Hikes Take Hold -Breaking
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(Bloomberg) — Prices on virtually all types of food and consumer goods are going up — and many Americans don’t seem to mind.
McDonald’s (NYSE:) Corp. and Coca-Cola (NYSE:) Co. shares jumped Wednesday after the companies reported rising demand even in the face of price hikes. The restaurant chain, in particular, pointed to higher menu prices in the U.S. boosting comparable sales almost 10%, above Wall Street’s expectations.
“We haven’t seen, I’ll say, any more resistance to our price increases than we’ve seen historically,” McDonald’s Chief Financial Officer Kevin Ozan said on a conference call with analysts. It used third-party firms to gauge customer sentiment and conducts menu price hikes of 6%. The latest bump “has been pretty well received by customers.”
The U.S. inflation rate has increased the most since 2008. This is due to companies dealing with many challenges such as higher commodity prices, snarled global supply chains and labor shortages.
See also: Everything’s expensive now, but it’s only getting worse
Consumers seem to be taking this in stride so far. Kraft Heinz (NASDAQ:) Co.’s organic sales unexpectedly climbed last quarter and profit topped expectations as the company balanced higher expenses with price increases — without alienating consumers. One analyst complimented Kraft Heinz for following the price line during a Wednesday conference call with Kraft Heinz executives.
Coca-Cola also raised its prices. It said that it will do this to combat rising costs next year.
McDonald’s shares rose as much as 3.5% Wednesday, the biggest intraday gain in seven months, while Coca-Cola climbed the most since July. Kraft Heinz had little change.
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