Rise in the price of McDonald’s Big Mac in Egypt: the fault of production costs – Economy – Business
Some blame the increase – which will no doubt affect Egypt’s position in the famous Big Mac index – on chicken prices, but this seems not to be the case as the cost of chicken has fallen slightly recently.
The recent evolution of the price of the Big Mac in Egypt will cast its shadow on Egypt’s position in the famous ‘Big Mac Index’ of the famous Economist Magazine, which measures the purchasing power parity between two currencies on the basis of 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 USD serving as the base currency against which the local currency is compared. The difference in cost of Big Mac sandwiches from country to country shows whether the local currency is undervalued or overvalued.
According to the index, in January 2022, the EGP was undervalued by 53.4% against the USD.
In the United States, inflation triggered a 7.5% increase in the price of a Big Mac in March 2022, the biggest year-on-year jump since 1981, according to the National Restaurant Association. The price of the Big Mac has increased by 40% over the last 10 years in the United States.
Two days ago, McDonalds Egypt increased the prices of its products by up to 40%, raising the price of the famous McDonalds Share Box from 123 EGP to 165 EGP, while the Grand Share Box increased from 176 to 235 .
The popular medium-sized Big Mac meal has also gone down from EGP 52 to 78, while the large-sized meal has gone down from EGP 59 to 88. The rest of the menu also saw similar increases.
According to long-time Mcfans Ahram Online spoke to, this is McDonalds’ latest and biggest price increase this year and has seen steady increases over the past few months, most recently in June.
Other major fast-food chains have started to follow in McDonalds’ footsteps – like KFC – according to reports, as many question the reason for the price hikes of their popular fast-food meals.
In statements to the Egyptian news site Cairo 24, the director of the Poultry Chamber of the Federation of Egyptian Chambers of Commerce, Abdel-Aziz El-Sayed, blamed the increase on the costs of production, distribution and labor, blaming chicken prices.
According to Abdel-Aziz, the price of chicken has dropped to EGP 31/1 kilogram on farms and is currently being sold to consumers at EGP 33/1 kilogram “despite the fact that it is expected to be sold at LE 35/1 kilogram due to the increase in the price of fodder, since it reached 1,900 EGP/1 ton.
This price drop occurs seasonally for two to four weeks after Eid Al-Adha, when citizens buy and consume red meat in droves.
He added that slaughterhouse owners buy chickens for EGP 33/1 kilogram and then – after processing them for large restaurants/franchises like McDonalds – they are sold for EGP 55/1 kilogram to account for the cost of the labor and transportation.
El-Sayed added that the chamber cannot hold big chains like McDonalds and KFC responsible for raising the prices of their meals unless the final price of a kilogram of chicken reaches or exceeds EGP 120 at the time. when it reaches the final consumer due to the consequent increases in manufacturing and production costs.
But it’s not just chicken or production costs that impact the price of the Big Mac and its brethren on McDonald’s menu, as there are also bread, beef and oil to account for, which were all impacted by the war in Ukraine.
Beef has also faced price increases recently due to the impact of the war in Ukraine on livestock fodder; the same 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 40% according to Egypt’s Food Materials Chamber.
In addition, Egypt is the largest wheat importer in the world and imported much of its grain from Russia and Ukraine before the outbreak of war via the Black Sea due to its high quality, competitive prices and its geographical proximity.
Following the disruption of the supply chain due to the conflict, Egypt has diversified its sources of wheat, with the government allocating much of its imported wheat to making subsidized bread, which is a staple of the country. daily diet of Egyptians for more than a year. 70 million citizens.
For unsubsidized bread, it’s a different story. Since March, the government has set prices for unsubsidized bread at EGP 0.5 to EGP 1 depending on size and type until further notice in all bakeries.
As a result, wheat prices have been rising over the past few months, but they have started to decline a bit over the past few days, according to reports.
In March 2022, the EGP plunged 15% to its lowest value against the US dollar after the Monetary Policy Committee (MPC) of the Central Bank of Egypt decided to raise the key rate by 1%
In May, the MPC raised policy rates again by 2% to deal with the negative economic repercussions of the Russian-Ukrainian war and to curb inflationary pressures.
According to the Central Agency for Public Mobilizations and Statistics (CAPMAS), Egypt’s overall monthly inflation fell to 13.2% in June, from 13.5% in May, for the first time in seven months .
McDonald’s price increase comes days after the Egyptian Automatic Fuel Pricing Committee (FAPC) decided on Wednesday to raise fuel prices for various octanes from 0.5 EGP to 1 EGP per liter while maintaining the price heating oil for electricity and food industries set in the biggest change of the year due to the global rise in oil prices.
In addition, the price of diesel and kerosene has increased from EGP 6.75 to EGP 7.25 per litre.
The McDonalds franchise in Egypt is owned and operated by Manfoods, which is a subsidiary of the Mansour Group.
Present in Egypt for 28 years, McDonalds Egypt operates more than 131 branches in 14 governorates, mainly in Cairo and Giza, with investments of over EGP 1 billion.