Executives Walk A Careful Tightrope On Pricing
By Jonathan Maze, January 27, 2011
Commodity prices are a hot topic on Wall Street right now, particularly as they concern restaurant chains, because of their potential impact on profits. One of the big questions is whether the executives will consider raising prices to offset these increases. A few, notably those at chains like Ruth's Chris that rely on business travelers who could care less about price, have pretty much said that they will. For the most part, however, executives at chains like McDonald's and Starbucks have been coy, lacing any talk of pricing with words like "selective" and "could" and "careful." Obviously, these restaurant executives know exactly the challenge that they face. They know that consumers can pull back awfully quick, as they've demonstrated time and again. They also know that while higher prices may help some stores, they can hurt others. Wendy's President David Karam this morning noted that pricing decisions should come with careful study and "vivid analysis."
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