Home delivery surge turns McDonalds’ Australian business into global leader

McDonald’s Australian business has powered through the pandemic, home-delivering record profits that have turned in into a global leader for the fast food giant.

McDonald’s opened 19 new stores in Australia during 2020. Picture: David Caird

McDonald’s Australia has cemented its position as one of the strongest operations for the global fast-food giant after it racked up its seventh consecutive year of comparative sales growth in 2020.

Despite the global pandemic, McDonald’s also achieved its highest ever level of profitability for franchise owners, with many customers trying home delivery services for the first time.

The Australian business was called out by McDonald’s Corporation president and global CEO Chris Kempczinski at a recent investor update. He highlighted the consistent revenue gains in Australia at a time when McDonald’s global same store sales have fallen 7.7 per cent over the last 12 months.

Mr Kempczinski revealed that McDonald’s Australia had actually doubled its home delivery volume, at a time when many other McDonald’s around the world were closed down and unable to serve customers.

McDonald’s Australia chief executive Andrew Gregory said the chain had grown solidly through 2020 and that the popularity of its online delivery service had been accelerated by a number of years amid the pandemic.

“I think we are fortunate to be in Australia, the Australian economy, and I think the government has done a great job of managing COVID and allowing our business to grow especially in comparison to Europe and North America,” Mr Gregory told The Australian.

He said the company operated in around 120 markets worldwide.

McDonalds Australia CEO Andrew Gregory at the Thornleigh store in Sydney. Picture: John Feder.

“I’m not sure if we are the best or not, but we have been able to grow the business last year and especially in the second half our growth accelerated as well and we also managed to open 19 new restaurants last year as well.”

On any global comparison the Australian business would stack up well, posting seven consecutive years of sales growth, compared to six years of growth in the US and five in Japan.

McDonald’s has around 1000 stores in Australia and is one of the biggest private sector employees, with 105,000 staff.

“That growth is great for our system, great for our franchisees and suppliers, and obviously the company as well,” Mr Gregory said.

Mr Gregory confirmed this had generated record profitability for store owners.

“That’s earnings before interest and tax, EBIT, at a restaurant level. So, McDonald’s is a pretty simple business that when we get the volume come through the restaurants it does well in terms of improving the profitability of the franchisees as well.”

In the COVID-19 pandemic McDonald’s was able to stay open by using its drive-through windows and also shifted sales to its online platform and delivery service, using partnerships with businesses such as UberEATS to reach consumers at their homes and workplaces.

The popularity of online deliveries has continued into the new year.

“If you think about our channels we have drive through, delivery and people coming into our restaurants and dining rooms. Obviously as restrictions eased and they are changing every day, as they do, more people came back into our restaurants physically to sit down and enjoy a meal.

“But it is interesting that some of the channel changes have been more sticky, so delivery I think as a general industry the community or the population have tried delivery during COVID and many people have stuck with it. A lot of people wouldn’t have tried it if it wasn’t for COVID, they have now tried it, it works and is very convenient and I think we have done a good job with that.”