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KFC increases its prices
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A burger meal with a cup of Pepsi will cost more now.

Fast food chain KFC yesterday increased prices of certain products in China, such as hamburger, beverage and breakfast, by 0.5 to 1.5 yuan.

A chain under Yum! Brands Inc, KFC yesterday said the company has been under a "huge cost pressure". The decision to raise the prices of its products was prompted by the continuous increase of raw material, labor, water and electricity costs, the company said.

"We will try to keep the prices stable if we can still bear the burden of rising costs," said Sarah Bai, a public relations personnel of KFC.

This is the first time the fast food chain has raised its price this year. Another major fast food chain, MacDonald's, raised prices of some of its product in January following another round of hikes last October.

"Paying 13.5 yuan for a hamburger seems too much," said Jin Jing, a 26-year-old legal professional in Beijing. "But that will not influence my choice since prices in other restaurants are also increasing."

"The profit margin of fast food enterprises has been decreasing since last year," said Qiao Jie, spokesman for China Cuisine Association.

The overall increase of food prices has added to the costs of food and beverage enterprises, according to Qiao.

Some other fast food enterprises also recently raised prices, said Qiao. "But it is hard to predict the future trend since it is related to the overall economic situation."

The National Bureau of Statistics in January said the consumer price index went up by 4.8 percent in 2007. Food prices, which went up 12.3 percent, are the main reason for the overall high inflation rate. Food prices last month rose by a whopping 23.3 percent.

Kentucky-based Yum! Brands, which also owns the Pizza Hut and Taco Bell chains, has over 2,500 outlets in China. Its turnover reached 21.5 billion yuan last year, with a profit increase of 30 percent. A Bloomberg report quoted the company as saying that it expects "high food-cost inflation" in China in the first half of 2008 and that costs will "moderate" later in the year.

(China Daily March 25, 2008)

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