First with Financial Comment from Arabia

McDonald’s faces Middle East crisis

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A 40 per cent increase in costs and surging local rental inflation means that McDonald’s will shortly be unable to contain the prices of its burgers in the Middle East and hike prices for the first time in two years.

McDonald’s empire in the region is strongest in the UAE where each of its 5.1 million residents eats an average of five sandwiches per annum. The local chain has 52 outlets and rings up over a million transactions a month.

But food price inflation is now rampant in the UAE where the local currency is pegged to the US dollar despite being in an economic boom rather than a slump. That means imports from non-dollar countries are rising in price as the US dollar falls in value.

However, McDonald’s is not slowing its expansion and local franchisee Emirates Fast Food Company told Gulf News it will open ten new restaurants this year and invest a total of around $7 million.

Indeed, the food inflation crisis is apparently not going to stop expansion to between 100 and 150 restaurants in the country which is already suffering a diabetes epidemic among nationals.

Hopefully McDonald’s will continue to develop healthy eating options such as the McArabia sandwich, featuring Arabic flatbread, chicken or lamb and salad.


Written by Peter Cooper

April 30, 2008 at 9:15 am

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