McDonald’s chairman and chief executive officer Jim Cantalupo and other members of his senior management team announced their plans for revitalising the US fastfood chain’s worldwide business at a meeting with the investment community in New York City today [Tuesday].
Cantalupo began the meeting by stating that “The world has changed. Our customers have changed. We have to change, too. Growth comes from being better, not just expanding to have more restaurants. The new McDonald’s is focused on building sales at existing restaurants rather than on adding new restaurants. We are introducing a new level of discipline and efficiency to all aspects of the business and are setting a new bar for performance.
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“We are committed to lower levels of capital spending until we have achieved a significant improvement in sales, margins and returns at our more than 30,000 restaurants. We also are committed to becoming more relevant to the lives of today’s consumers,” Cantalupo said, adding that McDonald’s would pursue realistic growth targets.
The company said it now expects capital expenditures for 2003 to be US$1.2bn, $800m less than in 2002 and $700m less than previously announced. The cash freed up will be used to strengthen the balance sheet and return cash to shareholders.
In 2003, the company expects to open about 620 traditional restaurants and 340 satellite McDonald’s restaurants, for a total of 960 new restaurants worldwide. Net of planned closures, worldwide restaurant additions are expected to total 360, compared with more than 1,000 in 2002.
For 2005 and beyond, McDonald’s is targeting annual systemwide sales growth of 3% to 5%, of which 2% will come from new restaurants and 1% to 3% from increased sales at existing restaurants. The fastfood giant is also targeting annual operating income growth of 6% to 7%.
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