PED in Action | Inflation Hits the Humble Cheeseburger

Now price inflation has hit the McDonald's cheeseburger! What will happen to demand?

The price of a cheeseburger has increased from 99p to £1.19

That's a 20.2% increase.

[Always show your workings: Change (£0.20p) / Original £0.99) x 100 = 20.2%]

It's just one of a range of price increases for the McDonald's menu in the UK.

Although two things are worth noting:

• It's the first time a cheeseburger has increased in price for 14 years (according to McDonald's)
• The price rise may not be implemented by all McDonalds franchisees who have some local control over menu pricing.
  

I suspect that McDonald's cheeseburgers have a PED of less than 1 since I can't imagine Uk demand for cheeseburgers falling by 20% or more as a consequence of the price rise.

So overall this ought to result in an increase in the sales revenue of cheeseburgers.

Of course some McDonald's customers may decide, if they can find them, to choose lower price items on the menu.

But, most customers will surely continue to order this classic menu item and perhaps miss out on items such as a Galaxy Caramel McFlurry or a Millionaire's Donut if they want to limit their total spend per order.