McDonald’s to invest P1B on new outlets

American fastfood giant McDonald’s Corp. will spend P500 million to P1 billion this year for the establishment of new stores and the improvement of its facilities to keep up with competition.

Golden Arches Development Corp. president George T. Yang said the group plans to set up 15 to 20 new stores this year to maintain double-digit growth in sales. Half of the new stores to be opened, he said, would be franchised.

Golden Arches is a 50-50 joint venture between Yang and McDonald’s, the world’s largest hamburger chain. It leases and manages the properties that house the McDonald’s restaurants.

Yang said funding for the group’s expansion will come from internally-generated cash. McDonald’s now operates 240 restaurants in the Philippines compared with Jollibee’s 988 stores.

He said the company’s performance for the first half this year has been very strong, bolstered by increase in food purchases during political campaigns in the lead up to the May national elections.

"Our performance has been quite good. We’re hopeful that the political situation will stabilize because this will be good for everybody," Yang said.

Yang said the company sees the need to close down unprofitable stores to cut on costs and enhance operating efficiency.

The Philippines is one of the rare countries whose homegrown fast food retailer has bested the McDonald’s franchise holder.

The rivalry between McDonald’s and Jollibee has been hot over the year, battling for consumer loyalty by outdoing each other in celebrity endorsements, value-meals, and promotional toys.

GADC has been aggressive in expanding McCafe, its coffeeshop retail business. It opened five McCafe stores last year, with each costing P3 million to P5 million.

There are 305 McCafe stores worldwide, including Australia, Hong Kong, Japan, Taipei and United States.

McCafe serves cinnamon, brownies, cheesecake, blackforest and other similar pastries readily available with coffee favorites such as cappuccino, latte, mocha or espresso.

Bullish about its investment in the Philippines and encouraged by the new retail trade law which makes it easier for foreign-owned corporations to do business in the Philippines, McDonalds Corp. has raised its investment in Golden Arches by $1.5 million (roughly P80 million).

In light of this, McGeorge and GADC merged their operations to create a unified and more efficient single business. GADC was the surviving entity.

Inspite of the merger, the entire senior management team of McDonald’s operations in the Philippines remained intact.

In 1981, McDonald’s opened its first store in the Philippines in Morayta in the University Belt.