McDonald's to scrap "one price fits all" strategy Tuesday, June 17, 2008

McDonald’s is planning to scrap its “one price fits all” strategy and raise prices in certain areas to counter the effects of food inflation.

After seeing food prices rise by more than 5%, the fast-food giant has hired consultants to survey how price-sensitive customers are in the UK and recommend where and on what menu items it can raise prices by 10p-20p.

The move is unusual as the majority of fast food and casual dining chains charge the same prices for menu items throughout the country, although franchises are sometimes allowed to charge different prices. Steve Easterbrook, chief executive of McDonald’s UK, said the company can no longer absorb price increases.

“The one-size-fits-all approach can hamstring you,” he told the Financial Times. “Everyone else is raising prices more than we are.”

McDonald’s believes scattered price rises on different items are less likely to encounter resistance from consumers than blanket increases and has tasked Revenue Management Solutions (RMS) with investigating the best way forward. “We wanted to provide some science to the art of menu-board price changes,” Easterbrook said.

RMS advises McDonald’s restaurants in the US but this is the first time it has been used in the UK.

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