McDonald's SA has plans to supersize

Executive director Greg Solomon said the local operation aimed to expand outlets by 15%-25% a year for the next few years.

By the end of the year the company, which opens its 112th restaurant today, in Polokwane, will have 125 outlets.

McDonald's opened its first South African outlet in November 1995 on Beyers Naude Drive in Blackheath. Solomon said the expansion targets were sustainable and set with a long-term view.

Despite the price tag of about R4m, franchised restaurants were in demand and the group had a number of sites being established.

Solomon said the group was cash generative and in a good financial and operational position. Of the R4m invested by a franchisee, a third must be unencumbered cash, while the rest of the investment can be geared.

Of the 111 South African restaurants, just over 60% were under franchise, while the rest were owned by the company.

Solomon said applicants for franchises, over half of which are owned by blacks, ranged from young entrepreneurs to bankers.

Franchisees went through a selection process and then received six to nine months of training before becoming owner-operators, said Solomon.

McDonald's, which sourced the bulk of its products locally, was also converting its outlets to an on-demand format.

The “Made for You” concept meant that orders should take under a minute to be prepared but were no longer pre-prepared. This allowed the group to have a more flexible menu and would allow for future innovation.

About 40% of the outlets were already operating under the new system. The rest would be converted but the investment paid off in 12-18 months, said Solomon, as wastage was reduced.

Source: Business Day

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