Customers might be deterred by a price hike. Customers don't seem to care.
There is a huge labor shortage in the US as more and more people quit their jobs. Even though higher wages would likely attract more workers, some companies have been hesitant to raise prices. They say that this would affect sales.
The owner of a small cleaning company in Virginia said that offering more benefits to workers could prevent the business from making enough profit to cover its expenses. The New York Times reported that a Checkers franchisee said she would have to raise menu prices if she were to raise her wages to 14 or 15 dollars an hour. She decided to go to automated drive-tries.
Ed Rensi was the former CEO of McDonald's.
Buying behavior hasn't been affected by the price increases of companies like Krispy Kreme and Nestlé, they say.
P&G has so far announced price increases in nine of its 10 product categories, which its chief financial officer said were generally in the mid- to high single digit percentage range. He told investors that P&G's sales were unaffected by price hikes.
"We have not seen any reaction from consumers," he said. That makes us feel good about our position.
Prices have been raised by Nestlé. Franois-Xavier Roger said last month that the company expected inflation to increase its cost of goods sold by 4%.
He told investors that the pricing changes were not to blame for the decrease in sales volume. He said that the company hadn't seen any evidence of consumers buying more than they need.
In the third quarter, the fast-food chain posted revenues of $2 billion, up from the previous year's revenues of 1.58 billion.
Consumers have no choice but to shoulder price hikes.
Consumers on social media say they don't mind paying a little more for products if it means the workers get a fair wage. Consumers have little choice but to pay the price hikes. Products are getting more expensive and some people are cutting back on spending.
Customers' acceptance of price hikes depends on a number of factors. It's easier for companies to raise prices if they have fewer competitors.
Josh Charlesworth, CFO of Krispy Kreme, said that the doughnuts are "largely resilient to pricing actions" and that they're usually shared or gifted. He said that the company's price increase in September hadn't hurt sales.
Companies that don't have enough labor may have to cut their hours, slash their services, or see their revenues plummet. If they want to stay in business, they will need to do a better job of attracting and retaining talent, and offer decent wages, even if it means hiking prices.
Do you have a story about the labor shortage? Please email this reporter at gdean@insider.com.
