McDonald’s countering recession, set to open 1000 new outlets

Posted by Isobel Drake on 27th January 2009

McDonald’s, the world’s largest fast-food chain, announced overnight that, despite sales showing signs of slowing in the fourth quarter, they continue to be able to perform above market expectations and many of their peers.

Global comparable sales rose 6.9% for the year spurred by growth in their international markets (outside the US), although the strength of the US dollar has begun impacting figures from markets such as the UK and Australia. For the quarter, global comparable sales increased by 7.2% but December only increased 5.8% – contrasting negatively with October and November data of 8.2 and 7.7 per cent rises, respectively.

“2008 was a strong year for McDonald’s,” said Chief Executive Officer Jim Skinner. “Through our strategic focus on menu choice, food quality and value, the average number of customers served per day increased to more than 58 million in 2008.”

In America, their ability to withstand an economic deterioration was done by “seizing opportunities in the key growth areas of chicken, breakfast, beverages and convenience.” A focus on value served them well, they noted, ensuring that consumers continued to frequent their stores with concepts like the $1 menu. “Our model remains recession-resistant,” Mr Skinner claimed in a conference call with analysts.

Asia/Pacific, Middle East and Africa sales and operating income growth were driven by “a sharp focus on breakfast, convenience and everyday affordability,” the company added.

The fast-food chain advised that they would open around 165 new stores in America, over 200 in Europe and approximately 600 in Asia, as they seek to capitalise on a fall in real estate prices. “Our disciplined approach to financial management continues to be an important component of McDonald’s success,” Mr Skinner said. “For 2009, we plan to invest $2.1 billion of capital to open about 1,000 new McDonald’s restaurants and reinvest in our existing locations.”

Mr Skinner remained optimistic about the future despite economic headwinds persisting. “I am pleased with McDonald’s 2008 results, which were achieved through the dedication of our Owner/Operators, suppliers and employees who provide an exceptional restaurant experience for our customers each and every day,” he concluded. “McDonald’s begins 2009 with six years of momentum, a business model that has delivered even in challenging economic conditions and January sales that remain strong.”