20 August, 2008 – The Australian arm of fast-food giant McDonald's has unveiled proposals to increase the number of its restaurants over the next 18 months in spite of the economic slump that has hit the country.
Australia Managing Director Peter Bush said the decision had been taken to push ahead with plans to increase the number of its stores from 767 to around 800 as the company had so far escaped any major falling off of sales felt elsewhere in the economy.
McDonald’s bullish strategy comes as coffee chain Starbuck announced its decision a few weeks ago to slash its outlet numbers from 84 to just 23. Australian retailers in general have reported their lowest first half sales figures in a decade.
But McDonald’s said it has bucked the trend posting a “double digit” increase in sales figures year-on-year, said Mr Bush. This is in part due to a change in the company’s practices that has seen a major overhaul including in cutting costs, market strategy, management changes and revamping menus. Reducing the number of its coffee suppliers from nine to one, is just a single example of this exercise.
Mr Bush was reported as saying: "Historically, what McDonald's would have seen are weak transactions against fuel price increases and interest rate hikes and we haven't seen that this time around.
"Whilst we're facing headwinds at the moment, at this point in time those headwinds are manageable and we're trying very, very hard not to increase our cost to service across the counter.
But he admitted this would be difficult to maintain in the face of rising overhead costs but said any increases were likely to be modest.
The McDonald’s chief said the company will continue to open new premises over the next 18 months to bring its Australian portfolio to about 800 by the end of next year.
Nevertheless, the company does plan to adapt to the change in economic fortunes by unveiling a new range of Value Pick menus across Australia. Mr Bush described described the move as “an absolutely appropriate response to consumer needs at the moment”.