McDonald’s expansion – McDonald’s has announced a significant growth drive, planning to open over 200 new restaurants across the UK and Ireland in the next four years. This ambitious £1bn expansion aims to increase the fast-food giant’s footprint by more than 10%, bringing the total number of sites to 1,700 across both countries.
The expansion will include testing new formats, such as “Drive to” restaurants, which will feature a car park, a small seating area, but no drive-through service. Other smaller restaurant formats will also be trialled as part of this strategy, which McDonald’s hopes will support their goal of catering to changing customer needs and behaviours.
Alistair Macrow, the Chief Executive of McDonald’s UK and Ireland, said the plans demonstrate the company’s “ongoing commitment” to driving growth and job creation in the region. According to McDonald’s, this expansion is expected to generate over 24,000 new jobs across the UK and Ireland.
In addition to expanding its restaurant footprint, the company has announced a renewed focus on High Street locations, taking advantage of the significantly reduced rent prices that have followed the economic impact of the COVID-19 pandemic. Many restaurants closed during this period, creating an opportunity for McDonald’s to secure prime locations at lower costs.
Retail real estate expert Jonathan DeMello noted that McDonald’s is likely capitalising on these cheaper rents, particularly in retail parks outside of London and other towns in south-east England, where demand has driven up costs in recent years. He added that falling interest rates and a slowly recovering economy may also play a role in McDonald’s decision to move forward with such an ambitious expansion plan.
However, this expansion comes at a time when McDonald’s is grappling with several challenges. The company has faced boycotts in parts of the Middle East and other regions due to perceived support for Israel during the Gaza conflict, which has dented sales. Additionally, McDonald’s pulled out of Russia following its invasion of Ukraine, further impacting global revenues.
Meanwhile, the company is still dealing with the fallout from a BBC investigation that uncovered over 100 allegations of sexual abuse and harassment within McDonald’s restaurants in the UK. Many of these complaints came from young female staff, who reported a culture of inappropriate behaviour and groping. McDonald’s has since launched an internal probe, pledging to eliminate unacceptable behaviour from its workforce and maintain its high standards.
Despite these setbacks, Danni Hewson, Head of Financial Analysis at AJ Bell, believes that McDonald’s move to open new restaurants during a period of reduced sales could prove to be a wise strategy. “If they can get the offer right and position themselves in high-traffic areas like High Streets, it could be a recipe for growth,” she said.
