Fast food giant's expansion faces hurdles

McDonald's is fighting to construct a large outlet on the East Taupo Arterial bypass. Photo / Supplied

At one stage, McDonald's was a hero, about to take on 60 new employees in Taupo. Then it became the villain, upsetting local retailers for hollowing out the town centre.

The fluctuating fortunes of the fast food chain in the lakeside town were highlighted by McDonald's developer director Brett Watson, who addressed last week's Property Council's retail conference in Auckland.

McDonald's big expansion drive in New Zealand could see nine new outlets built by the end of next year and 4000 extra staff employed.

Full details of the nine locations have yet to be revealed but the company has announced Britomart, Balmoral and Taupo. A big expansion of an existing restaurant in Pt Chevalier is also planned.

Growth in the past year has mainly been in the upper North Island with the exception of Frankton (at Queenstown) and Nelson, Watson says.

Watson is involved in the chain's unresolved battle to build an outlet on Taupo's East Taupo Arterial bypass, planning a McCafe, a dining area, playground, a drive-through and carparking spaces.

But more than 500 local retailers oppose the plans, fearing the power of McDonald's to act as a magnet. Shops could be forced to move from the town centre to be near the new outlet if it is allowed, says TownCentreTaupo.

Taupo already has a McDonald's, which would remain.

Watson is formerly of Jamie Peters' now-defunct Starline Group and Goodman Property Trust when it was Macquarie Goodman. He has been at McDonald's since 2009 and worked on the controversial outlet at Balmoral.

Just before Christmas, the Environment Court backed the former Auckland City Council's July 2009 granting of resource consent for the 159-seat playground and drive-through Balmoral operation but it rejected a bid to open from 6am-midnight, seven days a week. It allowed a 10m Golden Arches illuminated sign, which the council banned.

Balmoral Community Group, formed by 60 residents, went to court to put its concerns about traffic, noise and litter and the impact these would have on homes.

Construction at Balmoral is almost finished, with September the target opening month.

Watson is now involved in the less controversial deal for McDonald's to open a new Auckland CBD outlet at 2-8 Customs St alongside Britomart.

McDonald's wants to expand Pt Chevalier, having bought more land for offstreet parking and wanting to create a 24-hour-a-day operation.

The size of that restaurant and seat numbers will be expanded and drive-through capacity will be doubled, one civic expert said.

That outlet is at 1159-1161 Great North Rd.

In 2002, Watson was appointed to Starline to to head its Gulf Harbour project north of Auckland.

He was reported as being a registered valuer who had worked for Fletcher Properties since 1996.

He was also property services manager for Fletcher Distribution working with PlaceMakers and the Building Depot.

In his address, Watson criticised councils for imposing strict architectural and design criteria, citing Frankton and Whangaparaoa where McDonald's was forced to change plans to get consent.

"Local urban design panels start meddling with us," he said, citing the extensive use of cedar at Frankton, "which is not a good timber for our type of use" and marine-style materials at Whangaparaoa "so it's a beautiful beach house".

"What's the impact? It cost us a hell of a lot more money. Have we seen more sales? No. But we've had a positive reaction from the community who say 'wow, is this a McDonald's?"' Watson said.

McDonald's has been negotiating with Unite Union, a process which began in March.

Unite wants changes including $13 an hour pay to rise to $15 an hour, extending McCafe training and allowances, allowing a union noticeboard in each restaurant, security on night shifts and to have two maintenance staff rostered at all times to attend breakdowns and problems.

Watson said McDonald's had spent $200 million on new developments lately but 14 of the 16 outlets in Christchurch were affected by the earthquakes and four remained shut.

Target of 170 restaurants

McDonald's is keeping the lid on its new restaurant plans.

Simon Kenny, national communications manager, said 170 restaurants was a target.

"What that means practically is that aside from the Balmoral and Britomart restaurants, we don't have any other restaurants that we can talk about.

"There aren't nine new restaurants sitting in a pipeline about to be built. Of course, our development team is always looking at new sites and assessing their viability.

"We've had a number of other media inquiries from around New Zealand, asking if there are plans for McDonald's in their areas. Unless construction has started, or plans are in the public domain - for example, we just submitted a consent for a new restaurant on the Eastern Taupo Arterial which is publicly notified and currently being reviewed - then we can't say anything."

Britomart and Balmoral take its 161 outlets to 163.

"Construction has started on both, and they are both due for completion in the next few months," Kenny said, adding that framing was up at Balmoral now.