McDonald’s to transform 350 UK restaurants on back of 40 consecutive quarters of growth

LONDON, ENGLAND - JUNE 25:  An interior view of the world's largest McDonald's restaurant and their flagship outlet in the Olympic Park on June 25, 2012 in London, England. The restaurant, which is one of four McDonald's to be situated within the Olympic Park, will have a staff of 500. After the Olympic and Paralympic Games conclude the restaurant will be dismantled and all fixtures and fittings will be either reused or recycled.  (Photo by Oli Scarff/Getty Images)

McDonald’s UK boss Paul Pomroy said today that the fast food chain will complete a further 350 restaurant transformations by the end of the year, as he revealed the company served more customers in the first quarter than ever before.

Along with its franchisees, McDonald’s has delivered 40 consecutive quarters of sales growth in the UK, equating to 10 full years of expansion.

Pomroy said that investing in customer experience was “paramount” and that its response to evolving expectations is a multi-million pound investment in the next chapter of its UK story.

“By the end of March, just under 400 restaurants will have been transformed, with a further 350 to be completed by the end of the year,” he said. “And, as reported in January, following the successful trial of table service, where customers place their order via our new digital kiosks and have their food brought to them, we are accelerating its roll-out across all our newly transformed restaurants and now have over 100 restaurants offering it.

“We may have reached a milestone in terms of our growth, but we will continue to build strong and sustained momentum in the UK.  As I look ahead, we will remain restless in our investments and innovations in our restaurants, our people and our menu to deliver a great experience that our customers will continue to love.”

Pomroy said he was “pleased” with the company’s first quarter performance, which has seen it continue to grow like-for-like sales as well as customer visits across the UK.

“Our continued investment into what matters most for our customers and our people is paying off, with more customers being served in Q1 than ever before,” he said. “Since Christmas, we have introduced even more choice to our menu, re-launching our Chicken Legend range, offering customers a Fruit Bag as part of our breakfast menu and extending the trial of our Signature Collection range of premium burgers to over 60 restaurants”.

While McDonald’s UK has seen the competitive landscape shift over the past 10 years, Pomroy said that customers ultimately want the same things from the chain now as they did then: good quality food and increased menu variety served at affordable prices in modern, re-imaged restaurants. “This has been key to our journey over the last decade,” he commented.

Global first quarter financial results posted by McDonald’s today showed a global comparable sales increase of 6% for the three months to March 31. Results for the quarter benefited from stronger operating performance and comparison to the prior year’s strategic charges of $195m (£134m).

There was a consolidated revenues decrease of 1% (increase of 3% in constant currencies) compared to a consolidated operating income increase of 28% (33% in constant currencies), partly due to comparison against the prior year’s strategic charges.

“McDonald’s brand and business is built on offering delicious food and beverages through unmatched convenience and compelling value,” said McDonald’s president and CEO Steve Easterbrook.

“The turnaround plan we announced last year is grounded in enhancing these critical customer-driven elements, and I’m pleased to report that our turnaround is taking hold. The ongoing investments we’re making in running great restaurants and delivering what matters most to our customers are beginning to yield sustained positive results. For the quarter, we generated higher sales, revenues and operating income in constant currencies across all business segments.”

In the US, first quarter comparable sales increased 5%, fueled by the ongoing popularity of All Day Breakfast and the introduction of McPick 2 – a branded national value platform. Operating income for the quarter rose 15%, reflecting higher sales-driven franchised margins, comparison against the prior year’s strategic charges, and higher gains from restaurant refranchising. Looking ahead, the US business remains focused on finalizing its long-term value platform, investing in core menu enhancements and simplifying restaurant operations to deliver an outstanding customer experience.

Comparable sales for the International Lead segment increased 5% for the quarter, led by strong performance in the U.K., Australia and Canada as strong execution of core menu, compelling value and convenience strategies continued to resonate with consumers. First quarter operating income increased 12% (18% in constant currencies), driven by higher franchised margin dollars. The segment delivered strong results despite ongoing economic and competitive headwinds in France and Germany.

In the High Growth segment, first quarter comparable sales increased 4%, led by strong comparable sales performance in China and positive performance across various other markets, including Russia. In the Foundational markets, first quarter comparable sales rose 11%, primarily due to sales recovery in Japan. Quarterly operating income increases for both segments reflected comparison against the prior year’s strategic charges and recovery from the prior year’s impact of the 2014 supplier issue – both of which negatively impacted China and Japan’s results in first quarter 2015.

Easterbrook concluded: “Last week, McDonald’s came together for our biennial worldwide convention to galvanize around the actions we’re taking to be recognized by our customers as a modern and progressive burger company. I came away energised by the talented franchisees, suppliers and employees from around the world who are working to strengthen the fundamentals of running great restaurants to build strong and sustainable momentum. While there is still work to be done, we are on the right path to make even greater progress. I am confident that our continued efforts will deliver meaningful long-term value for all stakeholders into the future.”

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