Sun | Dec 4, 2016

Fast food price hike - Customers paying more at KFC, Burger King, Island Grill

Published:Sunday | January 10, 2010 | 12:00 AM

Dionne Rose, Business Reporter



It used to be that fast food was the answer when dining on a tight budget. Now, those budget meals are not only likely to pile on the pounds, but put the squeeze on patrons' pockets as well.

While consumers were bracing for generally higher prices on goods and services with new tax measures taking effect on January 1, the price of fast-food favourites had already been making a steady climb weeks before.

In a Sunday Business sampling, three of the island's fast-food restaurants blamed recent meal-price increases on costlier inputs -from electricity to water -and raw materials, even as they insisted that they were 'holding strain' and not passing on the full brunt of rising operating costs to consumers.

The informal survey showed that over the past three weeks, Island Grill, Burger King and Kentucky Fried Chicken (KFC) had all upped the prices of their tasty nibbles.

The increases ranged across franchises from below 5.0 per cent, up to 12.5 per cent, with Burger King topping the board.

KFC's popular meal deal costs $420, up from $395. Its Zinger, combo sandwich, has moved from $420 to $455. And the increasingly popular snack boxes rose from $235 to $250.

Tina Matalon, marketing manager for Restaurants of Jamaica, the operators of KFC and Pizza Hut, told Sunday Business that adjustments were made to KFC's menu board because of the rising cost of poultryfrom suppliers and a climbing electricity bill.

Since January 2009, the fried-chicken chain was hit with three sets of increases in the price of poultry, which hiked the cost of that input by a total of seven per cent, according to Matalon.

"This, plus increases in the cost of electricity, which has risen over an average of 22 per cent since January, in addition to increases in our other major inputs, such as beverages, seasoning, packaging and bread products, ranging from eight per cent to 58 per cent on 14 different items, have served to significantly push up the cost of preparing cooked products for our customers," the KFC marketing manager added.

Second price hike

December's menu price hike was the second for KFC last year. The first was in April.

It does not end there. The inflationary pressure for KFC was also affected by the devaluation of the Jamaican dollar, rendering imports more expensive.

But Matalon insisted that KFC has spared consumers some effects of the price pinch during the ongoing recession as not all the increases had been passed on.

"We remain aware that many of our customers have also been hurting," said Matalon.

"With that in mind, we made the deliberate decision not to pass on all of the increases to our customers. Even when we did have increases (on raw materials), we deliberately refrained from (passing on) all of those increases at the same time."

Island Grill, too, said it held out for a while but became almost punch drunk from absorbing price increases.

"We had a price increase from suppliers in November and we tried to hold out as far as possible because we know that with the recession, disposable incomes have diminished," said proprietor Thalia Lyn.

Then the drought did them in. Lyn said for her 15 outlets nationwide, on top of increased overhead costs from soaring utility rates, the recent drought forced them to purchase water at exorbitant prices.

"We had a big problem with water. We had to be buying water for $8,000-$10,000. All those costs we tried to control, but we found that it went out of sight," she said.

But even now, Lyn is suggesting that Island Grill's bump-up in menu prices has been kept below five per cent across the board, and has not given her chain a push into profits.

"It is not even a five per cent increase. Our margins are still nil," she told Sunday Business.

Island Grill has tacked a near seven per cent increase on to its popular Yabba meal, a small bowl of which is now sold for $235, up from $220.

Chicken sandwiches have seen a 5.5 per cent price rise to $380, from $360.

And as a sign of the tighter times, the restaurant no longer offers a drink with its meal combo. Customers are now required to exercise the "option" of paying an extra $55 for soda.

Nevertheless, Lyn is declaring: "We are not that bad. We only hand two price increases for the year."

The biggest price hikes - up to 12.5 per cent - have been imposed by Burger King.

Skimp and save

A regular chicken sandwich costs $40 more, up from $320 to $360. And its signature international sandwich combo now costs $400, up from $380.

The chain has for some time demonstrated a tendency to skimp and save - packing different combo meals into small bags, and denying customers additional cup holders. If, for example, their order comes with three drinks, they are allowed one two-panel cupholder.

Burger King'smarketing manager, Diana Blake-Bennett, was not immediately available for a comment, so there was no word from the chain on whether, in these testing economic times, taste or cost is king.

dionne.rose@gleanerjm.com



A KFC store at Portmore Mall, St Catherine. Island Grill in the Spanish Town Shopping Centre, December 2006. - File