Sept 23 (Reuters) – McDonald’s on Wednesday outlined about $8.5 billion in support for franchisees as part of an expanded growth plan and set targets for margin and market share growth as it looks to revive sales momentum after several muted quarters.
The new goals come shortly after it blamed execution missteps in winning back lower-income consumers in an uncertain economy for weaker-than-expected U.S. sales growth in the second quarter.
Ahead of its investor meeting later in the day, the company said the franchisee support investments will be over the next decade through 2036. It also set targets for restaurant productivity as well as for operating margin in the low- to mid-50% range by 2030.
The company’s turnaround effort in the U.S. is getting a renewed push under industry veteran Skye Anderson, who was named president of its U.S. business last month.
“We expect industry traffic growth in our wholly owned markets will be flat, while inflation remains elevated,” CEO Chris Kempczinski cautioned during the investor day conference.
Shares of the company fell 3.6% in early trading, reversing premarket gains. They have fallen nearly 18% so far this year.
Announced in June, McDonald’s “NEXT” strategy aims to improve food quality, hospitality, value and innovation, with executives on Wednesday providing the first detailed roadmap for the plan.
The plan also includes simplifying operations, modernizing restaurant designs, investing in employee training and expanding the use of ArchIQ, its AI-powered restaurant operating system that automates tasks such as drive-thru ordering.
McDonald’s expects the plan to improve restaurant efficiency by 250 basis points, generating about $100,000 in additional annual cash flow for the average U.S. restaurant.
The company said that of the $8.5 billion, roughly $5 billion will be invested by 2030 through a combination of rent relief and capital support for franchisees.
The burger chain also expects restaurant expansion to contribute about 2.5% of systemwide sales growth in 2027 and around 2% by 2030.
It also set a goal of gaining 1.5 percentage points of market share in chicken products globally by 2030 as rising beef prices boost demand for chicken.
(Reporting by Anuja Bharat Mistry in Bengaluru; Editing by Anil D’Silva)
Comments