McDonald's says more product price rises possible

BEIJING (Reuters) - McDonald's Corp (MCD.N) said on Thursday it was considering further price increases, but would do nothing that slowed customer traffic into its global network of stores.

The world's largest restaurant chain posted second-quarter profit that beat expectations on strong international sales, but said to offset mounting commodity pressures it was looking at changes to the popular Dollar Menu, which lures value diners.

"I don't think customers care that much if the price moves slightly away from a dollar," Chief Executive Jim Skinner told Reuters in an interview on the sidelines of an event to mark its sponsorship of the Olympics.

"It will always be the best value around," he said.

Much speculation swirls around the fate of the Dollar Menu double cheeseburger, which McDonald's has tested in certain markets at prices up to $1.29.

Skinner said McDonald's might adjust some prices in the menu, but that it would not abandon the Dollar Menu because it was a key part of bringing customers into its stores.

"We won't get rid of the Dollar Menu ... we must maintain traffic," Skinner said.

During the first half of the year, McDonald's raised prices in the United States by 4 percent and prices across Europe were boosted by 2 percent to 4 percent.

But the price rise accounted for just under half of the average annual gain in commodity prices that McDonald's faces.

While reducing costs and increasing efficiency are a part of McDonald's everyday operations, the company would not scale back its expansion.

"You can never shrink your way to prosperity," he said. "What we need to do is grow. If we grow the top line, that will take care of the (profit) margin."

McDonald's international operations continued to grow at a brisk rate, helping to insulate the company from the housing-led U.S. economic downturn that is hurting upscale restaurants.

($=6.85 yuan)

(Reporting by Kirby Chien; Editing by Louise Heavens)