McDonald's Phl to spend P3.5B for expansion, new meat plant

MANILA, Philippines -- The local unit of fast food giant McDonald’s is spending P3.5 billion this year for store expansion and the construction of a new meat plant as it targets to sustain its growth achievement in 2016 amid a bullish economy and increased consumer spending.

McDonald’s Philippines of the Golden Arches Development Corp., majority owner and master franchise holder of the brand, is set to open at least 45 stores nationwide worth P2 billion.

"Our immediate target for this year is around 45 restaurants. We are optimistic since the Philippines is growing quite fast and we want to keep pace with the growth and grow as well all over the country," McDonald’s president and CEO Kenneth Yang said in a briefing.

"For the years after that, we may increase but we have to see what happens to the economy and I think the economy is doing well, population is there and we are in a nice demographic area for young people. We are very bullish in the Philippines," he added.

While 80 percent of McDonald’s stores is concentrated in Luzon and Metro Manila, the company wants to explore more in the Visayas and Mindanao area to cater to more consumers.

"There’s a lot of opportunities everywhere, but in particular we probably have to grow more in the Visayas and Mindanao. We have good presence but there are still big opportunities," Yang said.

Last year, McDonald’s opened 45 stores including its 500th store, located along the Tagaytay-Calamba road.

Currently, there are 521 operating stores under the company’s portfolio and opening of stores in Dumaguete, Antique and Sorsogon is in the pipeline for the first quarter.

Furthermore, McDonald’s is also building a P1.5-billion meat plant in Calamba, Laguna to supplement its operation in its existing plant in Cainta, Rizal.

Yang emphasized that 2016 financial performance was record-high and was able to sustain its double-digit growth for the past 10 years.

"Our net profit was about P1.2 billion, a significant growth from the previous year and we had a 70-percent growth in profit after tax," he said.

Systemwide sales, a measure of all sales to consumers both from company-owned and franchised stores, grew 14 percent to P38 billion last year and is targeted to reach P41 billion this 2017.

"The consumer market is getting stronger in the Philippines and we are optimistic this year and for the future," he said.

Meanwhile, McDonald's Philippines founder and chairman George Yang said the quick service restaurant has no plans to go public anytime soon.

"We are focusing on the business and we don’t need to go public as of the moment. We just do our own thing, the company is controlled by us and we are just answering to ourselves," he said.

Next to China and Japan, McDonald’s Philippines is the biggest and leading market for the brand in Greater Asia in terms of store units.

Of the total stores in the country, 55 percent is owned by the Yang family while the remaining 45 percent is franchised.

A McDonald’s franchise costs around P40 to P50 million with a return of investment in four to five years.