McDonalds Forecasts Higher Menu Prices

OAK BROOK, Ill.McDonalds Corp. announced its 1Q11 profits rose 11 percent; however, it anticipates small increases in menu prices throughout the remainder of the year to offset rising ingredient costs that have taken a bite out of the burger chains margins.

As reported by Bloomberg, McDonalds anticipates food expenses to increase approximately 4.5 percent in the United States and Europe, up from its prior prediction of an increase of 2 percent to 2.5 percent in the United States and an increase of 3.5 percent to 4.5 percent in Europe.

First-quarter net income rose 10.9 percent to $1.21 billion, or $1.15 per share, topping analysts' profit view by 1 cent. Total first-quarter revenue rose 9 percent to $6.1 billion. Operating margin fell to 17.7 percent from 18.2 percent as costs for food and paper rose. Food and paper costs were 33.6 percent of sales in the quarter, compared with 32.9 percent a year earlier.