Eli Greenblat
April 24, 2012
The Age
Not so bright: McDonald’s Australian market has been described as challenging.
AUSTRALIA’S love affair with Big Macs and french fries may be waning, with McDonald’s growth in the region sliced by more than half.
The fast food giant’s global chief operating officer, Donald Thompson, described the local market as ”challenging” and getting worse.
To counter the sales downturn across Australian stores, McDonald’s has introduced initiatives including the launch last month of its Loose Change menu, which offers a range of items under $2 and its Value Lunch deal.
Releasing its first-quarter earnings results in the US on the weekend, McDonald’s said sales at its US stores were up 8.9 per cent for the quarter, while comparable-store sales rose 5.5 per cent in its Asia-Pacific, Middle East and Africa region (APMEA), which takes in Australia.
Mr Thompson, who takes the reins as chief executive in July, confirmed the tough trading environment the company faced in Australia. China was also proving difficult.
”[In] APMEA, we’re seeing challenging economic conditions, with slow growth in China and ongoing tightening in Australia,” he said. ”We’re managing … with a focus on compelling menu offerings, strong value and convenience. Australia is focused on branded affordability.”
A spokeswoman for McDonald’s Australia said the business was still growing, despite the tough trading conditions, but confirmed that sales growth had slowed.
”In recent years we have seen 2 to 3 per cent growth when historically it has been high single digits,” she said.
Only a few years ago, following the global financial crisis, Australia was one of the best-performing regions for the restaurant chain. In 2009 the local operation posted sales growth of 6 per cent, nearly double the global rate of 3.8 per cent.
The stronger performance was driven by an image overhaul, including a revamp of its menu to offer healthier alternatives as well as gourmet-style burgers, such as the Angus Burger, which proved a big hit.
The Australian spokeswoman said the local business had improved in the past two months and managers expected it to match global growth rates as the year continued. McDonald’s is estimated to have a 46 per cent share of the quick-service restaurant category in Australia. It is planning to open 35 stores this year to take its Australian portfolio to 900.
Recent figures from the Bureau of Statistics showed food retailing was flat in February, while seasonally adjusted sales at cafes, restaurants and takeaway food services fell 0.7 per cent. Seasonally adjusted sales at takeaway food outlets fell 0.9 per cent.
Subscribe to our free mailing list and always be the first to receive the latest news and updates.