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KFC is pushing up prices at its Australian stores at a faster pace than its rival McDonald’s, with consumers paying up to 25% more for some of the fast food chain’s most popular items, new analysis shows.
The higher-than-inflation hikes add to the mounting pressure on consumers facing steep price rises for food, irrespective of whether it is sold through a drive-through window or supermarket checkout.
The price for a Zinger burger combo has increased from $8.95 to $10.95 since June last year, a 22% increase. A pack of six nuggets has increased in price by 25% to $7.45.
Analysis conducted by UBS found that while individual items and meal combos – these include a main item and hot chips and drink – had increased in price at a faster pace at KFC, they were still typically cheaper than their McDonald’s equivalents.
Collins Food, which operates KFC’s more than 260 outlets in Australia, said it could not comment, citing the upcoming release of its financial results.
The fried chicken chain has faced higher costs for food products, with the price of potatoes soaring around the world. But chicken prices appear to have peaked late last year, according to wholesale food price data, while prices for wheat, canola oil and cheese have also been falling.
Overall, KFC prices have risen an average of 14.7% over the past year. McDonald’s prices at its Australian stores are up 8% since August, according to UBS.
The chief executive of Collins Food, Drew O’Malley, has previously said the company would try to lift prices in a way that did not annoy customers to improve its profitability.
The company, which also operates Taco Bell in Australia, was an early standout stock market performer of the pandemic amid surging demand for takeaway.
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Its share price performance has deteriorated since early 2022 due to rising costs. KFC is also sensitive to wage increases given its large workforce.
Rising food prices have come under scrutiny amid evidence some food manufacturers and retailers have used the pandemic and subsequent cost-of-living crisis to not only sell more goods but also increase their profit from sales.
Critics say this is evidence of inflationary profiteering.
Fast food is a significant contributor to food inflation, which is running at 7.9% and one of the primary drivers of household financial pressures.
Across a sample set of six menu products, KFC products are now priced at an average 6% discount to McDonald’s equivalents, according to UBS. One year ago, KFC products were 18% cheaper.
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