It’s still a happy meal for Maccas

McDonald’s plans to have Create Your Taste in 800 Australian stores this year. Photo: Supplied

McDonald’s sales and visits have increased in Australia over the half year, proving a bright spot for the world’s biggest restaurant chain as it is racked by falling global sales and food shocks in Asia.

McDonald’s released its sales figures this morning, which showed global comparable sales fell by a deeper-than-expected 1.7 per cent in February, but there was another “positive result” for Australia.

Analysts had expected global comparable sales to fall by 0.3 per cent, according to Bloomberg. The results makes it nine straight monthly falls.  

Comparable sales in the US were down 4 per cent in February, Europe bucked the trend with a 0.7 per cent rise, and Asia/Pacific, Middle East and Asia (APMEA) sales were down 4.4 per cent.

The US-based fast-food giant says Australia is one of four priority markets. It does not break out sales for its 940-odd Australian stores, about 80 per cent of which it says are franchised.  

But the last annual accounts for McDonald’s Australia Holdings show a 25 per cent increase in profit to $234.4 million, despite receipts from customers edging down to $1.06 billion.

McDonald’s Australia Holdings paid $40 million in dividends in the 2013 calendar year, from $14 million the year before, and invested $177.6 million in new property, plant and equipment.  

And as McDonald’s seeks to “reset” its business after a “disappointing” 2014, it has declared Australia to be a “great spot in our overall turnaround with positive comparable sales and guest counts since September of last year.”

“The team has re-energised the business with strong promotions and relevant menu items and they are fuelling this momentum with additional excitement around digital initiatives and the rollout of Create Your Taste across the majority of the market this year,” Kevin Ozan, chief financial officer, told analysts last week.

Create Your Taste, burgers made fresh to order, is in 16 Australian stores and McDonald’s plans to roll them out across 800 – except for those in shopping centres – by the end of June. This expansion will soak up some of the $US2 billion McDonalds plans to spend this year.

By contrast, Create Your Taste is in just 15 stores in the US and McDonald’s said it “may” help Australian and US franchisees with rollout costs estimated at between $US100,000 and $US150,000 a store.

In the competitive $11 billion Australia fast-food market, in which market darling Domino’s Pizza is seeking to increase its 8 per cent share, McDonald’s in January offered free fries and soft drinks with Big Mac purchases. It has also offered a “Loose Change Menu” for years, selling small items for $3 and under.

And after expanding its menu to include items such as steak and aioli rolls, smoothies, frappes and grilled warm chicken salads, McDonald’s is now looking to reduce the number of products it sells.

Chief administrative officer Pete Bensen said: “Part of it is frankly looking at low moving items and taking them off the menu, but some of that is looking at how we actually display and market it.

“So it could be something like maybe in the drive-thru you … only display the items that make up 80 per cent of our sales and you could significantly reduce the clutter.”

McDonald’s this week reported continued troubles in Japan, after a series of food scandals: the rationing of fries, and the finding of a human tooth in fries and plastic in chicken nuggets.

“APMEA’s February comparable sales decreased 4.4 per cent due primarily to the broad-based consumer perception issues in Japan, partly offset by a benefit from the shift in timing of Chinese New Year in China and certain other markets, as well as positive results in Australia,” it said.

“Rebuilding brand trust by strengthening McDonald’s quality and value perceptions is one of APMEA’s top priorities for 2015.

APMEA accounted for $US6.3 billion of McDonalds $US27.4 billion global sales in 2014.

Last week’s official retail figures show spending on cafes, restaurants and takeaway food rose 0.3 per cent in January, or 2 per cent seasonally adjusted, to almost $3.4 billion.

Follow us on Twitter @BusinessDay
More retail news and analysis