McDonald's to raise prices to reflect increase in commodity costs

McDonald's, a brand that's practically synonymous with value, is set to raise its prices later this month.

Joining a series of other brands, including Starbucks, Kraft and General Mills, McDonald's may need to increase the cost of some of its popular menu items in order to cope with rising commodity prices. The fast-food chain is hit especially hard by an increase in the prices of wheat, which goes into its hamburger buns, and corn, which, because it goes into cow feed, directly affects the price of beef.

Commodity prices are expected to increase by 2 to 3 percent in 2011.

The price increase will be McDonald's first in more than a year. So far, the company has staunchly refused to hike up the cost of its menu staples in order to remain competitive with rival fast-food chains, such as Wendy's and Burger King. Now, however, the giant will be forced to pass some of its rising expenses onto its customers.

Even so, McDonald's CFO Peter Benson isn't too worried.

"We'll actively look at the opportunities and with some optimism, the economy will get stronger next year and we'll get price increases," Mr. Bensen told the Wall Street Journal.