McDonald’s sales in Australia booming as drive thru thrives

Fast-food giant McDonald’s maintained its strong profit run through the worst months of COVID-19 last year despite its ­restaurants being closed.

Drive thru proved a winner for McDonalds during COVID.

Fast-food giant McDonald’s maintained its strong profit run through the worst months of COVID-19 last year despite its ­restaurants being closed and its stores pivoting to drive-thru sales and home deliveries through the various lockdowns.

The latest accounts for McDonald’s Australia, which owns about 150 corporate stores and services another 850 franchisee stores, showed a healthy profit for calendar 2020.

However, a larger slice of those profits of McDonald’s Australian operations were remitted to the US parent company following the renegotiation in 2020 of the licence and royalty arrangement.

According to McDonald’s Australia accounts lodged with the corporate regulator, the Australian offshoot of McDonald’s global empire paid $558.48m in service fees, up from $432.84m in 2019.

Drive thru allowed McDonalds to keep operating while customers could not come into its eateries.

A spokesman for McDonald’s Australia said the higher fee paid to the US parent was expected after the renegotiation of the contractual relationship between the two companies.

The higher service and royalty fees back to the US shaved McDonald’s profits in Australia, with its profit for 2020 down to $206.36m from $242.05m in 2019.

McDonald’s reported that its Australian operations took in $1.7bn in revenue for 2020, up slightly from $1.678bn in 2019, with that revenue relating to food sales from its 150 corporate stores and rents from franchisees. According to the ASIC accounts the network of about 850 franchisee-owned McDonald’s restaurants paid rents to McDonald’s Australia of $554.7m in 2020, against rent fees of $528.7m in the previous year.

McDonald’s has traditionally booked sizeable revenue from its rental deals with franchisees and the company is as much a property company as it is a food business.

McDonald’s alliance with online delivery platforms, such as menulog and Uber Eats, helped extend its reach into homes during the pandemic as its restaurants were partly closed.

“The continued strength and performance of the company’s drive thru portfolio, and significant growth in delivery and digital channels, offset challenging COVID-19 market operating conditions throughout the reporting period,” McDonald’s Australia said in its 2020 financial report.

McDonald’s Australia did not apply for the federal government’s JobKeeper program, it said.