McDonalds' Big Mac price increases in Egypt: Blame placed on production costs

Zeinab El-Gundy , Tuesday 19 Jul 2022

McDonalds Egypt announced earlier this week a major increase in the prices of its products by up to 40 percent, prompting other fast-food chains to follow in its footsteps.

McDonald s
Archive photo of McDonald s restaurant (Photo: Reuters)


Some blame the increase — which will undoubtedly affect Egypt’s position in the world-famous Big Mac Index — on chicken prices, but it seems that might not be the case since the cost of chicken has slightly declined recently.

The recent change in the price of the Big Mac in Egypt will throw its shadow on Egypt’s position in the famous Economist Magazine’s ‘Big Mac Index’, which measures the purchasing power parity between two currencies based on the price of the famous Big Mac.

In simpler terms, it measures “how many Big Mac burgers you can get for a certain amount of dollars in a country, with the USD serving as the base currency to which the local currency is compared to. The difference in the cost of Big Mac sandwiches from one country to another shows whether the local currency is undervalued or overvalued.

According to the index, in January 2022, the EGP was undervalued by 53.4 percent against the USD.

In the US inflation has triggered a 7.5 increase in the price of a Big Mac in March 2022 , the biggest y-o-y jump since 1981, according to the National Restaurant Association. The Big Mac price has risen 40 percent over the last 10 years in the US.

Two days ago, McDonalds Egypt raised the prices of its products by up to 40 percent, raising the famous McDonalds Share Box’s price from EGP 123 to 165, while the Grand Share Box went up from 176 to 235.

The medium-size popular Big Mac meal also increased from EGP 52 to 78, while the large-size meal went from EGP 59 to 88. The rest of the menu recorded similar increases, as well.

According to long time Mcfans that Ahram Online spoke with, this is the latest and most significant increase in McDonalds’ prices this year and that it has been witnessing steady increases over the past months, most recently in June.

Other major fast-food chains have begun to follow in McDonalds’ steps — like KFC — according to news reports, as many wonder the reason behind the increase in prices of their popular fast-food meals.

In statements to news Egyptian website Cairo 24, head of the Poultry Chamber in the Federation of Egyptian Chambers of Commerce Abdel-Aziz El-Sayed blamed the increase on production, distribution, and labour costs, shifting the blame away from chicken prices.

According to Abdel-Aziz, the price of chicken declined to EGP 31/1 kilogram in farms and is currently sold to consumers at EGP 33/1 kilogram “despite the fact that it should be sold for LE 35/1 kilogram due to the increase in the price of the fodder, as it reached EGP 1,900/1 ton.”

This decline in prices happens seasonally for two to four weeks after Eid El-Adha, when citizens buy and consume red meat en masse.

He added that owners of slaughterhouses buy chickens for EGP 33/1 kilogram and then — after processing it for major restaurants/franchises like McDonalds — it is sold for EGP 55/1 kilogram to account for the cost of labour and transportation.

El-Sayed added that the chamber can’t hold big chains like McDonalds and KFC accountable for raising the prices of their meals unless the final price of 1 kilogram of chicken increases to or exceeds EGP 120 by the time it reaches the final consumer due to the consecutive increases in the manufacturing and production costs.

But it is not only chicken or production costs that impact the price of the Big Mac and its brothers on McDonalds’ menu, because there is also bread, beef, and oil to account for, all of which have been impacted by the war in Ukraine.

Beef has also faced price hikes recently due to the repercussions of the war in Ukraine on livestock’s fodder; the same thing can be said for oil, especially sunflower oil, which Egypt imports from Ukraine.

Egypt is one of the top ten importers of sunflower oil. In May, food oil prices jumped by 40% according to the Food Materials Chamber in Egypt.  

Furthermore, Egypt is the world’s largest wheat importer and had been importing much of its grain from Russian and Ukraine before the outbreak of the war through the Black Sea due to its high quality, competitive pricing, and geographical proximity.

Following the disruption of the supply chain due to the conflict, Egypt has been diversifying its sources of wheat, with the government allocating a great deal of its imported wheat to make subsidised bread, which is a key staple of the everyday Egyptian diet for more than 70 million citizens.

For unsubsidised bread, it is a different story. Since March, the government fixed the prices of unsubsidised bread at EGP 0.5 to 1 according to the size and type until further notice in all bakeries.

Consequently, wheat prices have increased over the past few months, however, they have begun to decline a bit over the past few days, according to reports.

In March 2022, the EGP plunged to its lowest value against the USD by 15 percent after the Central Bank of Egypt’s Monetary Policy Committee (MPC) decided to raise the key interest rate by one percent

In May, the MPC raised the key interest rates again by 2% to deal with the negative economic repercussions of the Russian-Ukrainian War and curb inflationary pressures.

According to the Central Agency for Public Mobilisations and Statistics (CAPMAS), Egypt’s headline monthly inflation declined to 13.2 percent in June, down from 13.5 percent in May, for the first time in seven months.

The  increase in McDonalds’ prices comes days after the decision of Egypt’s Fuel Automatic Pricing Committee (FAPC) on Wednesday to raise fuel prices for various octanes by EGP 0.5 to EGP1 per litre while keeping the price of mazut for electricity and food industries fixed in the biggest change in the year due to the global rise in oil prices.

Moreover, the price of diesel and kerosine rose from EGP 6.75 to EGP 7.25 per litre. 

The McDonalds franchise in Egypt is owned and operated by Manfoods, which is a subsidiarity of Mansour Group.

Operating in Egypt for 28 years, McDonalds Egypt runs more than 131 branches in 14 governorates, mostly in Cairo and Giza, with investments of more than EGP 1 billion.

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