McDonald's in $100m expansion drive

Mark Hawthorne says 10 new stores will be opened this year. Photo / Greg Bowker

McDonald's is planning aggressive expansion in New Zealand, building 30 more restaurants and hiring another 6000 staff over the next three years.

Despite retail statistics showing that fast food sales are at best flat, the chain will open 10 new outlets in 2009 - more than it has in the past eight years combined, local managing director Mark Hawthorne said.

The company and its franchisees will between them spend $100 million this year on building new stores and refurbishing existing ones, he said.

Last month McDonald's reported a 7 per cent increase in same-store sales for the three months to March, on the back of 10 per cent growth in 2008.

About half of the chain's 143 existing stores are open 24 hours, which Hawthorne said had contributed significantly to the increase in sales.

But he said other factors had also impacted, such as the re-imaging of many restaurants, improvements in the food being offered and better service times.

Three years ago the average service time at a McDonald's drive-through was 4.5 minutes - that had been reduced to 2.5 minutes, he said. "We've invested quite a bit in the last two years, and I think that has made us somewhat recession-resilient."

Latest Statistics New Zealand figures show takeaway food retailing was down 0.3 per cent in February compared with a year ago.

Hawthorne said McDonald's was offering a permanent low pricing menu, and it was seeing a customer shift to those products.

But he claimed the chain had also stolen market share off competitors. He said of the top eight quick service restaurants in the market McDonald's had around a 35 per cent share, up from 31 per cent 12 months ago.

Hawthorne said McDonald's penetration was relatively low in New Zealand, at one restaurant for every 30,000 people. In the United States that figure was one to 22,000.

There were sites around the country where its competitors had outlets and it did not. "We'd like to change that."

Cheaper and more accessible real estate and lower interest rates were helping the company "put the foot down", he said.

Russel Creedy, chief executive of Restaurant Brands, which runs rival fast food chains KFC, Pizza Hut and Starbucks, said there had been no change in the market for takeaways in the past three to six months and trading conditions were tough.

He said much of McDonald's success was because of its 24-hour opening. "Anybody can put 10 per cent more sales on their business if they stay open for 25 per cent longer hours."

But that came at the expense of staff who had to work the graveyard shift. Restaurant Brands would not be going down that route, he said.

Hawthorne said only a few McDonald's outlets had trouble recruiting people to work overnights, and those that had were paying a premium to attract staff.

ARCHES SPREAD

* 143 existing stores.
* Plans to expand to 173 by the end of 2011.
* 8000 employees.
* That will increase to 14,000.