McDonald's exploring Dollar Menu price hikes: COO

LOS ANGELES (Reuters) - McDonald's Corp (MCD.N: Quote, Profile, Research, Stock Buzz) said on Wednesday it is exploring price hikes on its popular Dollar Menu in a bid to protect profits as costs for beef, cheese and other items continue to rise.

McDonald's has used its Dollar Menu, which includes $1 double cheeseburgers and other items, to drive traffic amid a housing-led U.S. economic downturn. That dependence has put pressure on franchisees, who take the margin hit on the low-priced menu items.

"What fits on that menu will look different than now because it has to be profitable," said McDonald's Chief Operating Officer Ralph Alvarez on a conference call with analysts.

"We've got to make sure we're pricing smart, not just pricing low. We'll make the move at some point," Alvarez said.

(Reporting by Lisa Baertlein; Editing by Brian Moss)