McDonald’s to spend $1bn on new and existing Australian stores
Antoni Martinez says he has ‘ketchup in the veins’ having started at McDonald’s as a teenager. He is now rolling out 100 new stores in its biggest Australian expansion in decades.
McDonald’s has unveiled its biggest Australian expansion plans since the 1990s that will see the fast-food chain invest more than $1bn on its stores to ride a fresh wave of popularity in its restaurants, online delivery platforms and rewards program.
Under the historic expansion strategy led by recently appointed McDonald’s Australia boss Antoni Martinez, McDonald’s will open more than 100 new restaurants over the next three years to the cost of around $600m as well as upgrade over half its current store network that will cost another $450m.
It comes at a time when consumers are demanding greater convenience more than ever, a trend that accelerated since the Covid-19 outbreak, with McDonald’s looking to take advantage of new innovations such as its mobile app and online delivery that is connecting diners with the famous fast-food chain.
The growth at this new breakneck speed will see 30 McDonald’s restaurants opened this year alone, which is double the normal rate of annual new store openings, with McDonald’s Australia aiming to lift its network from around 1020 currently to have more than 1100 sites around the country by 2025.
And all at a time when soaring inflation and the rising cost of living threatens discretionary purchases such as a family going out for a meal at McDonald’s or having it delivered to their door by a third party delivery service like UberEats.
“It is a challenging time for everyone, but I would say that we see a really great growth opportunity journey. What we’re really excited to announce and talk to the broader customer base is a really exciting growth ambition for McDonald’s over the next three years.
“More so than we’ve ever seen since the early 1990s.”
Burger flipper
Mr Martinez, 37, who says he has “ketchup in the veins” having started as a teenager flipping burgers in his local McDonald’s as well as a stepfather builder who built McDonald’s stores, says McDonald’s want to reward customers with new restaurants as well as modernise its existing fleet.
“It’s an ambitious growth target,” Mr Martinez told The Weekend Australian.
“I just think when you look at our performance at the moment, it’s a great opportunity for us to accelerate that growth. We are seeing customers and sales growth, we’re seeing opportunities to innovate and excite customers, because we’re seeing drivers in growth such as the delivery platform and drive thru, in our McCafe.
“And it tells us that Aussies are really keen to see more McDonald‘s in their local communities. We’re seeing growth around a country with transport hubs that really provide a great opportunity for McDonald’s to look at accelerating that growth as well.
“In those new restaurants and existng stores over the next three years it is going to generate 40,000 new jobs on the current 115,000 employees across the system.”
Mr Martinez, who returned to Australia late last year to take up the role as the local McDonald’s boss after a two-year stint running McDonald’s Korea, isn’t concerned about a spate of new stores cannibalising existing sites - which has caused some headaches for other fast-food chains eager to ramp up their presence with a large pipeline of new stores.
The issue of cannibalisation is especially tricky for McDonald’s given its heavy reliance of franchisees who invest their life savings in owning and operating stores, with 85 per cent of all McDonald’s stores in Australia owned by a franchisee.
“We work really closely with our franchisees in those local communities where we were looking at opening a new restaurant, the factors that we look at when we open a new restaurant being population growth, gap analysis, where there is trade area opportunities and where we really want to make sure that we are optimising the convenience that we‘re providing customers when they come into a McDonald’s restaurants.
“So there may be some cannibalisation, but the growth is there, and we see great opportunities to open McDonald’s restaurants, partnering with our franchisees in opening those restaurants and seeing great growth in both those new restaurants and also the growth in their existing restaurants as well.”
Growth plans
Part of the new-found growth for McDonald’s has been a potent combination of its online platforms, home delivery and its mobile app which has supercharged that convenience offer since Covid-19.
This has been underpinned by an increasingly popular loyalty and rewards program through its MyMacca’s Rewards program launched in March 2022 and which has seen incredible growth, with millions of active members monthly.
Mr Martinez said over the past 12 months, customers have redeemed more than 58bn points and more than 14m products including over 7m McCafe beverages, 1m large fries and 730,000 Big Macs.
Fusing together the mobile app, online orders and home delivery, total digital sales for McDonald’s is now about 40 per cent of system-wide sales in Australia.
“It continues to highlight the value that customers put towards convenience, their ability to engage on the MyMacca’s app … it provides another platform for customers to engage with their favourite brands.”
When it comes to the broader economy, Mr Martinez said McDonald’s hasn’t been immune to inflationary pressures and it has worked closely with its franchisees to offer great value but also remain profitable with some prices lifted in the last 12 months but below the general level of inflation.
And with cost of living pressures growing everyday and household budgets under sustained pressure McDonald’s is fighting every day to remain competitive and an affordable treat that can remain on consumer shopping lists.
“Customers are telling us they definitely see coming to McDonald‘s as a treat. You do see some shifts across the day and how customers react. For example, we know we are serving one in four Australians their coffee every day which is huge and we know that despite some of the challenges things like coffee are really important.
“We’re seeing great growth in areas like coffee and breakfast remains a really strong day path for customers to come in. Customers are looking for great value and that’s not just about price, it’s about when they come and visit, they want great food, great experience, great customer service as well.”
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