Why McDonald's Made A Massive Amount Of Revenue In 2021
McDonald's had a very solid business year in 2021. The New York Times reports that the fast food chain pulled in over $23 billion over the course of the year and their profits rose 59% from 2020. Overall, the business accumulated a very sizable profit of $7.5 billion, and the company ended the year with the best revenue stream it has seen since 2016.
McDonald's has a few factors to thank for this. The brand's decision to increase menu prices helped significantly, while its digital loyalty program and promotions centered around the McRib, Crispy Chicken Sandwich, and Chicken McNuggets helped further boost profits. Over the course of 2021, the company increased its menu prices by 6% while taking consumer opinions into account. "That's where we keep a really close eye as we take pricing, is how customers are reacting, both in terms of customer research and how they view value and whether they're still coming in from a transaction standpoint," the C.F.O. of the company told The New York Times.
A strong year for McDonald's
While McDonald's had a very strong year, experts originally predicted better financial gains. According to CNBC, the rising cost of food and packaging materials seriously hampered McDonald's ability to pull in a profit. The increase in price of ingredients that go into making Big Macs and McNuggets has risen to the point where the chain had no choice but to raise menu prices to ensure it could pull in a sizable profit. The price crunch made its way to stockholders as well; the company's shares slightly fell in the fourth quarter. Operating costs and expenses also significantly increased over the course of the year, while drive-thru times started to slow. The chain tried to defray some of this burden by keeping their stores open at regular capacity, despite surges in the Omicron variant.
Overall, the chain finished the year with stock share costs lower than Wall Street analysts predicted, per The Spokesman-Review. On the other hand, international sales slightly exceeded expectations by about 2%, which proves beneficial moving into 2022. Experts have forecast that the price of food and labor continues to rise, McDonald's may need to adjust their business practices further if they hope to pull in a similar amount of revenue in the coming year. Only time can tell what happens next to this restaurant, but with the right choices, the chain has the potential to continue strong in the next financial quarter.