The New Unhappy Meal At McDonald's: Higher Prices

Fast food giant Mcdonald's Corp MCD appears to be on track to battle franchisees on a new front: Happy Meals, The Wall Street Journal reported.

What Happened: McDonald's provides each restaurant with a $300 a month subsidy to help finance the cost of the toy in children's Happy Meals.

This subsidy will come to an end, as the corporate office will use the money to finance other activities, including benefits for restaurant workers.

Franchisees may be left with no choice but to lift the price of Happy Meals by 20 cents or more to offset the lost subsidy, according to WSJ.

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Why It's Important: McDonald's relationship with its franchisees has been mostly strong during the pandemic, as consumer preferences dramatically shifted toward restaurants with effective drive-thru and delivery options.

The decision to end a subsidy marks another area of financial concern for franchisees, according to WSJ.

McDonald's is adding a $423 bill for 12 months starting in March to recover uncollected technology fees that date back to 2017.

What's Next: A McDonald's executive said during a Monday call with franchisees that it hasn't properly explained the new fee structure.

"I think there is an opportunity for better communication," WSJ quoted McDonald's U.S.A. president Joe Erlinger as saying.