Source: Financial Times, January 24/25, 2009
McDonald's defies downturn with plans for 240 more restaurants
Chain to create 12,000 jobs across Europe
McDonald's is planning to create 12,000 jobs and open 240 new restaurants across Europe this year, it emerged yesterday, as the fast-food chain shows signs of being one of the few global companies to benefit from the financial crisis.
In stark contrast to the multinational groups announcing record job cuts and losses, McDonald's plans for expansion in Europe are its biggest in five years.
'We're certainly not slowing down,' said Denis Hennequin, president of McDonald's Europe as he outlined to the Financial Times his plans to hire 50 people at each of the 240 new restaurants, mostly in Spain, France, Italy, Russia, and Poland.
How would you characterize McDonald's strategic survival option?
Further market penetration plus market development (concerning fast food) plus (concentric) diversification (concerning the McCafes).
Not since 2003, when McDonald's revamped its global business strategy to focus on making money from sales at existing restaurants, rather than simply by adding new ones, has it added so many jobs or opened so many restaurants in Europe.
The chain's low priced menus are attracting a customer base that was already expanding as a result of improved store designs and new menu choices. Company executives argue that food price inflation has made its fast food 'a better deal than necessarily eating at home'.
McDonald's has been one of a handful of leading US companies to thrive globally amid the prevailing consumer gloom - together with Wal-Mart it was the only member of the Dow Jones Industrial average to see its share price go up last year, by 7 per cent.
When the fast-food group reports fourth-quarter results on Monday, analysts expect company profits will rise some 10 per cent. Mr Hennequin claimed there were 'no signs of weakening' in the group's European business – where comparable store sales rose 7.8 per cent in November – but acknowledged consumers, particularly in Germany and Spain, were favouring the cheapest menu items. Sales have also been healthy in the US, up 4.5 per cent in November, while table-service restaurants Denny's and Ruby Tuesday reported sharp falls in customer traffic and sales. In Asia, sales rose 13.2 per cent.
The fast-food group also planned to add about 400 new McCafes to the 800 it already has in Europe this year. Most of the jobs McDonald's is adding in Europe will be part-time and will include restaurant managers, assistant managers, swing managers, hostesses and crew.
Subsections 4.2.1, 4.2.2-4.2.5
Sections 2.3 and 2.4