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Better not bigger at McDonald's
McDonald's chairman and chief executive officer, Jim Cantalupo, has announced plans for revitalising the burger chain's business.
Cantalupo said: The world has changed, we have to change too. Growth comes from being better, not just opening more restaurants. Our focus will be on building sales at existing sites rather than adding new ones.
He added that the company will be committing to lower levels of capital spending until sales, margins and returns at their restaurants have shown a significant improvement. Earlier this year, McDonald's reported a loss in net income for the quarter ending 31 December 2002 of $343.8m.
As a result of this change in approach the company now expects capital expenditure for the current year to be $1.2bn, $800m less than in 2002 and $700m less than was announced previously.
In 2003 the group expects to open a total of 960 new restaurants worldwide, compared with over 1,000 in 2002, but inclusive of planned closings this figure drops to 360.
McDonald's is aiming for annual sales growth for 2005 and onward of 3 to 5 per cent, 2 per cent of this coming from new openings and 1 to 3 per cent from increased sales at existing sites. It is also targeting 6-7 per cent growth in annual operating income.
The company is also committed to becoming more relevant to the lives of today's consumers.
In March this year, Cantalupo announced the creation of the McDonalds Advisory Council on Healthy Lifestyles. This is an independent group of nutritionists and other experts with a brief to assist the company in addressing the need to provide more healthy choices for its consumers. Details: www.mcdonalds.com