McDonald’s has plans to expand its UAE portfolio from 90 to 100 restaurants by the end of 2011 or the first half of 2012, says a senior executive at the international fast food chain’s local franchisee.
Rafic Fakih, Managing Director-Partner of Emirates Fast Food Company, the UAE licensee of McDonald’s Corporation, says their move reflects a growing confidence in the country’s consumer market.
In an interview with Alrroya.com, Fakih admitted that during the height of the global financial crisis in 2008,
McDonald’s growth slowed as earnings suffered a beating from UAE’s dwindling tourist arrivals and residents’ more conservative spending habits.
But three years after the worldwide economic drought, outlook for one of the world’s leading fast food chains has regained its lustre.
“Even during the credit crunch we still managed to register growth, although at a lower rate. We experienced a slowdown in sales in 2008 to just one-digit growth, but [our latest record shows] that growth returned to double digit in June and July this year compared with the same period in 2010,” Fakih says without disclosing specific sales figures.
The franchisee, which launched its first McDonald’s restaurant in the UAE in 1994, currently operates 90 outlets across the Emirates. The company is aiming to meet its target of opening additional restaurants, bringing its total of McDonalds’ establishments in the country to 100 towards the end of 2011 or the first half of 2012.
Aside from malls and commercial centres, the managing director says EFFC has likewise opened McDonald’s restaurants in residential communities such as Jebel Ali, Emirates Hills, The Springs and Green Community in Dubai, with the prospect of opening more when opportunities arise.
“Normally we go where customers go,” quips Fakih when asked about their domestic expansion plans.
Waking up to breakfast success
Famous for its Happy Meals, McDonald’s has also kept the till ringing through their breakfast business, which was launched in December 2009 and has gained a significant following among UAE consumers.
“To us this is a segment that has seen considerable growth since we first launched it,” Fakih says.
Over the past six months, the chain’s breakfast business has ballooned by 25 per cent, attracting over 100,000 customers every month. At the moment, only 40 of McDonald’s 90 outlets provide a breakfast menu ranging from pancakes to Egg McMuffin, but Fakih says they are considering widening this segment’s reach to include more restaurants in the near future.
Overseas, McDonald’s has gained market share in the coffee retail industry through its McCafe shops, even challenging caffeine bigwig Starbucks. In the United States, for instance,
McCafe sales soared by 29 per cent in the second quarter of 2011, helping McDonald’s Corporation reach a 25-per-cent hike in quarterly profits to $1.41 billion (Dh5.2bn), according to international media.
In the UAE, Fakih says EFFC has opened a pilot McCafe shop in Dubai. The company has no immediate plans to expand this segment, but Fakih acknowledges that it could hold huge business potential in a country that has a very strong coffee culture.
“We have [opened] only one McCafe [to test the market]. We have no plans for more McCafe until perhaps next year because it depends on the location of the restaurant. We need [locations, which have] very high traffic,” he says.
Importing inflation
While he did not mention any move to hike their menu prices, Fakih has raised concerns over the impact of the weakening US dollar on their grocery bill as McDonald’s UAE, which like many food establishments in the country, relies largely on imported raw materials.
“As you know the UAE currency is linked to the dollar so we import inflation. There is a general trend of commodity prices going up. Petrol prices are also soaring and the weakness of the dollar is [fueling] these price increases,” Fakih says. He is hopeful, however, that this trend will correct itself later on.
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