Eyeing growth, McDonald's plans 1,000 new stores
The efforts are part of the Oak Brook, Ill., company's "Plan to Win" strategy, CEO Jim Skinner told analysts on a conference call Thursday. McDonald's, along with other value-priced retailers such as Wal-Mart Stores (WMT), has weathered the recession well, as value-seeking consumers have ditched higher cost alternatives in search for more bang for the buck. That has helped McDonald's bottom line.
Still, sales have suffered. The company reported earlier this month that October sales rose 3.3%, driven by greater demand in Europe, Asia and Africa. In the U.S., however, sales were flat, suggesting that Americans continue to pinch pennies as unease grows about where the economy is headed. In response, McDonald's said it would begin offering a dollar menu for breakfast items beginning in January.
Speaking to analysts Thursday, Skinner said that while the worst may be behind it, the company is still operating in a difficult environment. "Like most companies, we do better when the economy is strong and consumers are confident," he said.
The company's focus during the last seven years has been "on being better, not bigger," Skinner said, allowing the company to consistently meet targets of average annual sales growth of 3% to 5% and average annual operating profit growth of 6% to 7%.
Skinner said the goals "are realistic and sustainable for a company our size and keep us focused on making the best decisions for the long term."
In addition to freshened stores and new menu items, the company said Thursday it also seeks to improve service, and plans greater use of technology "to make it easier for managers and crew to quickly and accurately serve the customer."
The company's preliminary 2010 outlook is for costs of to remain flat in the U.S. and Europe, it said. In addition, McDonald's said that currency translation is expected to benefit 2010 earnings by 10 cents to 13 cents a share based on current exchange rates. Earnings this year have been affected by currency fluctuations.
Shares of the company were lower at about 1:25 p.m. in New York, down 1.1% to $62.13 a share. McDonald's said it will release November sales results Dec. 8.
The company operates more than 32,000 restaurants in 100 countries. Among the newest are a McDonald's restaurant and McCafé in Paris's Louvre museum, slated to open by year's end. With the addition France will have 1,142 stores nationwide. Sales there have risen 11% this year.