Flat Sales at McDonald’s as spend at outlets falls

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SALES AT McDonald’s 77 Irish restaurants were almost flat in 2010, as “challenging economic conditions” saw consumers spend less.

However, strong growth in its coffee products is expected to keep turnover levels steady this year.

While the fast-food restaurant saw an increase in customers last year – it served an extra 920,000 customers compared with 2009 – turnover grew by just 1 per cent to €202 million. This indicates an average turnover of €2.6 million in each restaurant.

According to the company, while the numbers of customers passing through the doors is up, the actual spend by each customer is slightly down.

“This is a strong performance across our Irish operations and has been achieved against a backdrop of very challenging economic conditions and low consumer confidence,” said Adrian Crean, McDonald’s newly appointed managing director in Ireland.

He added that the introduction of new products at affordable prices, such as wraps and coffee items, are boosting sales.

So far this year, McDonald’s has opened four new restaurants – in Liffey Valley, Cashel, Ballymun and Balbriggan – with the creation of 300 jobs.

The chain now has 81 restaurants in Ireland; of these, 69 are controlled by franchisee, and 12 by McDonald’s Restaurants of Ireland (MRI).

In 2010, MRI reported a turnover of € 85 million, down by 0.5 per cent on 2009. This figure includes products sold in its 12 restaurants, as well as revenues generated by franchising activities.

While McDonald’s does not disclose its profitability at an overall level, profits before tax for MRI fell by 6.5 per cent to € 13.9 million in 2010, and MRI paid tax on profits of € 2.7 million.

Shareholders’ funds fell by 1.4 per cent to €89.3 million in 2010. Staff costs also fell in 2010, down by €348,000 to €18.4 million.

The restaurant chain is continuing to invest in upgrading, with 17 outlets refurbished in 2010, at a cost of € 5 million

Looking ahead, Mr Crean said he expected the trends experienced in 2010 to continue into 2011, “with sales expected to be maintained across our outlets”.

Moreover, he expected coffee sales to drive growth in 2011. So far this year, coffee sales are reporting double-digit growth on 2010; if this momentum continues, 2.7 million cups of coffee will have been sold across McDonald’s outlets in 2011.

The chain will also press ahead with expansion plans, with another four restaurants due to open in 2012.

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