McDonald’s Australia to open 40 stores a year, says CEO Andrew Gregory

McDonald’s Australian CEO says the chain is speeding up plans for new stores, and has weighed in on whether there’s room for plant-based burgers on the menu.

McDonald's CEO Andrew Gregory. Picture: Hollie Adams

McDonald’s Australia chief executive and managing director Andrew Gregory says the fast food chain is planning to open as many as 40 new restaurants annually in the coming years, as the franchise seeks to fast-track its local growth.

Mr Gregory, speaking at The Australian’s Global Food Forum in Sydney on Tuesday said McDonald’s would continue to open new restaurants in “every corner” of the country, and continue to offer familiar products popular with consumers throughout the pandemic.

“We opened our 1000th restaurant last year, we’re very proud of that,” he said.

“And we’re opening about 25 restaurants a year and they’re our traditional, full service, drive-through, freestanding restaurant with a car park, with a cafe. They represent our brand the best, they deliver our best consumer offering and best returns as well.

“We’re hoping over the next couple of years… we’re trying to get to 40 restaurants over the next couple of years, which is a significant level of growth for a mature business like Maccas.”

Mr Gregory said the fast-food chain – which orders 32 million kilograms of beef and 16 million kilograms of chicken a year – had continued its growth during the pandemic, while navigating price increases in soft commodities.

“It’s a challenge and beef is one of those commodities that does become very volatile for us,” he said.

“But we have to be great value in our business. It is a competitive industry, we pass on costs, but when we do but we try to be as cost effective as possible.

“A lot of our suppliers have been around for 50 years as well and we work with them and one of the things we value is certainty over lowest costs, so having certainty, having long term relationships with our suppliers is incredibly important to manage costs in our businesses.”

Mr Gregory said the business had seen a trend in customers returning to popular and iconic favourites during the pandemic, rather than branching out in the menu.

“What we found customers do last year was go back to our core favourites such as Big Mac quarter pounder, cheese burger compared to new products,” he said.

“In difficult times when they come to our business is they go back to what they know and love.”

McDonalds Australia CEO Andrew Gregory speaking at the Global Food Forum held in Sydney on Tuesday. Picture: Nikki Short

He noted that the chain had been lucky it was well equipped with drive through and delivery options for customers to tackle the challenges of the pandemic as well as digital ordering.

“Nearly half of all our transactions are through our app, through delivery or through the digital kiosk, (where you) say their favourite orders and use it at the kiosk and scan their phones,” he said.

“These things are becoming more and more connected, we serve two million customers a day so we’re a bricks and mortar business but the digital platforms allow us to serve customers in the way that they want.

“One of our greatest orders is getting the orders from our customers into our kitchen and when a customer does it themselves they do it more accurately, they do it better and they actually enjoy the experience.”

Mr Gregory said that McDonald’s had no immediate plans to shift towards plant-based products.

“The reality for our business is given the volume that we sell and for our suppliers all the way down to our farmers we have to sell a lot of something to make it worthwhile,” he said.

“And we do a much better job of selling something that we sell a lot of versus a whole bunch of niche products we don’t do as good a job of either in terms of efficiency or quality.

“Plant based for us is interesting but also challenging to make sure that the customer that comes into our restaurant is going to choose McDonald’s for a plant based product.

“That’s a decision for us that we need to make really carefully, verses what we know they come to us for is a barista made coffee, or it's a Big Mac or a cheeseburger made from Australian beef.”

He said the company tended to stick to new “twists” on popular menu items when it comes to making changes, such as its Wagyu beef promotion that saw it become the biggest purchaser of the luxury meat.

“I think we love staying as simple as we possibly can,” he said.

“The more we can sell the product the better our restaurants run and the better the customer service we can provide.”

Meanwhile, Mr Gregory warned that disruptions to global supply chains could be with us for the foreseeable future with the fast food giant filling warehouses with restaurant equipment, like drive-through hardware and cash registers, to safeguard its store rollout ambitions.

Although McDonald’s food is 95 per cent sourced from domestic growers, it was heavily reliant on importing key technology, hardware and other infrastructure that was vital to the smooth operation of its 1000-plus chains.

This resulted in McDonald’s stocking up on equipment through the Covid-19 pandemic as it became clear that offshore technology would be harder to obtain.

“Supply chain for us has been a domestic challenge from a food point of view”.

“Our restaurants are full of technology, full of equipment and automation now. And so we’ve effectively done some very simple blocking and tackling in terms of supply chain.

“We brought a lot of things forward and we bought a lot of storage space around the country to make sure that we‘ve got enough equipment, enough technology, enough of what we need to operate our business ready to go,” Mr Gregory said.

This would be an ongoing issue as the pressures on supply chains continue during the global pandemic, but McDonald’s was prepared to carry the costs of holding surplus equipment.

“It’s a cost from a holding cost point of view. But the reality is, I think the way of that supply chain challenge is going to be with us for another couple of years.”

Originally published as McDonald’s Australia to open 40 stores a year, says CEO Andrew Gregory