Some are attributing the rise – which will no doubt affect Egypt’s position in the world-famous Big Mac Index – to chicken prices, but it seems that may not be the case as chicken prices have fallen slightly of late.
The recent price change of the Big Mac in Egypt will cast its shadow on Egypt’s position in the famous Economist Magazine’s “Big Mac Index”, which measures the purchasing power parity between two currencies based on the price of the famous Big Mac.
In simpler terms, it measures “how many Big Mac burgers you can get for a given dollar amount in a country, using the USD as the base currency against which the local currency is compared. The difference in the cost of Big Mac sandwiches from one country to another shows whether the local currency is undervalued or overvalued.
According to the index, the EGP was undervalued by 53.4 percent against the USD in January 2022.
In the US, according to the National Restaurant Association, inflation triggered a 7.5% rise in the price of a Big Mac in March 2022, the largest year-on-year increase since 1981. The price of Big Macs has fallen sharply in the US over the past 10 years years increased by 40 percent.
Two days ago, McDonalds Egypt increased the prices of its products by up to 50 percent, raising the price of the famous McDonalds Share Box from 123 to 165 EGP, while the Grand Share Box went from 176 to 235.
The medium-sized, popular Big Mac menu also increased from 52 to 78 EGP, while the large menu increased from 59 to 88 EGP. The rest of the menu also saw similar increases.
According to longtime Mcfans Ahram Online spoke to, this is the latest and most significant increase in McDonald’s prices 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 McDonald’s footsteps, news reports say, as many wonder why their popular fast-food dishes have soared in price.
In statements to Egyptian news website Cairo 24, Abdel-Aziz El-Sayed, head of the poultry chamber at the Association of Egyptian Chambers of Commerce, blamed the rise on production, distribution and labor costs, shifting the blame away from chicken prices.
According to Abdel-Aziz, the price of chicken on farms dropped to 31/1 kg EGP and is currently sold to consumers at 33/1 kg EGP, “although it should be sold for 35/1 kg LE due to the increase in feed price, since it reached 1,900 EGP/1 ton.”
This price drop occurs seasonally for two to four weeks after Eid El-Adha, when citizens buy and consume red meat en masse.
He added that slaughterhouse owners buy chickens for 33/1kg EGP and then – after they’ve been processed for large restaurant/franchises like McDonalds – they sell them for 55/1kg EGP to cover labor and transport costs cover.
El-Sayed added that the Chamber cannot hold large chains like McDonalds and KFC accountable for increasing the prices of their meals unless the final price of 1 kilogram of chicken rises to or above EGP 120 by the time it reaches the end consumer consecutive increases in manufacturing and production costs.
But it’s not just chicken or production costs that drive the price of the Big Mac and its siblings on the McDonald’s menu, there’s also bread, beef and oil, all of which have been impacted by the war in Ukraine.
Beef has also faced price increases recently due to the impact of the war in Ukraine on animal feed. The same goes 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 rose 40% in Egypt, according to the Food Materials Chamber.
In addition, Egypt is the world’s largest wheat importer and, due to its high quality, competitive prices and geographic proximity, imported much of its grain from Russia and Ukraine before the outbreak of the Black Sea war.
After the supply chain was disrupted due to the conflict, Egypt has diversified its wheat sources, with the government using a large proportion of the imported wheat to make subsidized bread, which has been a staple of the Egyptian diet for more than 70 million people.
With unsubsidized bread, it’s a different story. Since March, the government has fixed the price of unsubsidized bread in all bakeries at EGP 0.5 to 1 depending on size and type until further notice.
As a result, wheat prices have been rising for the past few months, but have reportedly started to decline somewhat in recent days.
In March 2022, the EGP fell 15 percent to its lowest level against the USD after the Monetary Policy Committee (MPC) of the Central Bank of Egypt decided to hike interest rates by 1 percent
In May, the MPC raised interest rates again by 2% to deal with the negative economic impact of the Russo-Ukrainian war and contain inflationary pressures.
According to the Central Agency for Public Mobilizations and Statistics (CAPMAS), Egypt’s monthly headline inflation in June fell to 13.2 percent from 13.5 percent in May, for the first time in seven months.
McDonald’s price hike comes days after Egypt’s Fuel Automatic Pricing Committee (FAPC) decided on Wednesday to raise multi-octane fuel prices by EGP 0.5 to EGP 1 per liter, while increasing the price of Mazut for the electricity and food industry record biggest change of the year due to global oil price hike.
In addition, the prices for diesel and kerosene rose from EGP 6.75 to EGP 7.25 per liter.
The McDonalds franchise in Egypt is owned and operated by Manfoods, a subsidiary of the Mansour Group.
McDonalds Egypt has been operating in Egypt for 28 years and operates more than 131 stores in 14 governorates, mainly in Cairo and Giza, with investments of more than EGP 1 billion.