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McD speeds expansion, sets oil change deadline, touts delivery

McD speeds expansion, sets oil change deadline, touts delivery

OAK BROOK ILL. McDonald’s Corp. said it is testing a flurry of new products and considering the addition of more fruit and vegetable side dishes as the chain aims to complete its U.S. purge of artificial trans fats within a year. —While green-lighting accelerated expansion worldwide,

But meal delivery could be a new secret weapon for the chain’s sales growth abroad, officials of the world’s largest restaurant brand hinted at the company’s annual shareholder meeting here May 24. —While green-lighting accelerated expansion worldwide,

Giving an update on the speed at which the chain’s new oil is being rolled out to U.S. units, McDonald’s chief financial officer Matthew Paull revealed that the trans-fat-free frying medium was being used in 3,500 domestic branches—nearly triple the number of units that had made the change as of January. He indicated that all of the chain’s nearly 14,000 U.S. outlets could be using it within the next 12 months. As of January, some 1,200 branches had the oil, following the chain’s decision to switch to an unhydrogenated blend of soybean, corn and high-oleic canola oils, and after McDonald’s had tested and rejected some 17 varieties in more than 50 different blends, including the soy-corn mix that Wendy’s adopted last year. —While green-lighting accelerated expansion worldwide,

Paull said the speed of the oil rollout would depend on the harvest and processing of plants already being grown for the chain in North and South America. —While green-lighting accelerated expansion worldwide,

Indicating that it would dip into its strong cash flow, McDonald’s also said it would allocate most of its development capital during the next year to markets with significant growth potential, including China, Russia, France, the United Kingdom, Australia and the United States. Some 200 U.S. outlets would be added this year, the company said. —While green-lighting accelerated expansion worldwide,

Chief executive Jim Skinner repeated the chain’s Jan. 24 announcement that McDonald’s plans to spend $1.9 billion this year to open 800 restaurants and remodel 2,000 others. The net increase in stores would be about 400, after nearly as many older, underperforming restaurants are closed. —While green-lighting accelerated expansion worldwide,

Last year, when the chain budgeted $1.8 billion to open a planned 800 outlets and close 400 others, McDonald’s ended up opening 643 traditional restaurants and 101 smaller, limited-menu “satellite” outlets while closing 284 traditional units and 180 satellite branches. —While green-lighting accelerated expansion worldwide,

Skinner said he expects McDonald’s new-restaurant growth to accelerate to about 1.25 percent, compared with a range of 0.9 percent to 1 percent in the past few years. —While green-lighting accelerated expansion worldwide,

In China alone, plans call for the opening of 100 outlets this year, with half of those having drive-thrus, Paull told reporters after the shareholder meeting. Some 20 McDonald’s locations already have opened in China so far this year. —While green-lighting accelerated expansion worldwide,

As of April, McDonald’s Chinese operations encompassed some 790 restaurants and 50,000 employees. The chain, which has not begun franchising in China, is rushing to catch market leader KFC, which has nearly 1,700 branches in China. —While green-lighting accelerated expansion worldwide,

On the menu front, McDonald’s officials indicated that the chain continues to test many new products, including sweet tea, smoothies, espresso drinks and one-third-pound Angus beef burgers. They also said McDonald’s is interested in adding more health-oriented items because of the success of its entrée salads and the apple slices and carrot sticks it now offers as sides. Though officials reportedly discounted the possibility of adding more fruits and vegetables as entrées, they acknowledged that more side dishes are a possibility. —While green-lighting accelerated expansion worldwide,

McDonald’s previously said it would have a new fryer oil ready for use in New York City by July 1, when the city’s trans-fat ban for restaurants takes effect. —While green-lighting accelerated expansion worldwide,

Officials also expressed confidence that McDonald’s would remain the quick-service leader in the breakfast market and in responsiveness to concerns about the environment and humane treatment of farm animals. —While green-lighting accelerated expansion worldwide,

Accelerated new-unit growth would come at a time when McDonald’s sales are robust worldwide, Skinner said. He told shareholders that same-store sales in the first quarter had risen 8 percent in Europe, 8.5 percent in the chain’s Asia-Pacific/Middle East/Africa division, 14.7 percent in Latin America and 4.4 percent in the United States. —While green-lighting accelerated expansion worldwide,

“We will allocate a majority of this capital to those markets that have historically delivered strong returns or that have significant growth potential, including the U.S., France, China, the United Kingdom, Russia and Australia,” Skinner said. —While green-lighting accelerated expansion worldwide,

He added that McDonald’s has “strong momentum in every area of the world where we do business.” —While green-lighting accelerated expansion worldwide,

“Demand for our services and products is expanding at a healthy rate,” he said. “In fact, the global informal eating-out category in which we compete is projected to grow by $200 billion over the next four years.” —While green-lighting accelerated expansion worldwide,

Skinner credited the chain’s sales surge in part to an increase in the number of McDonald’s with 24-hour drive-thrus, varying menus of localized products and meal delivery in some international markets. He said business hours had been extended in major markets in Europe, Asia-Pacific, the Middle East, Africa and Latin America, contributing to positive results. —While green-lighting accelerated expansion worldwide,

Delivery is now offered in 17 countries, said Timothy Fenton, president of McDonald’s Asia-Pacific. In Egypt, delivery accounts for 28 percent of sales, he indicated. —While green-lighting accelerated expansion worldwide,

“Delivery works well in very congested cities where there is a culture of delivery,” Fenton said. “We’re just testing it in China, and it grows each year.” —While green-lighting accelerated expansion worldwide,

As for increased quick-service breakfast competition in the near future, Ralph Alvarez, McDonald’s president and chief operating officer, said the chain is not worried about holding on to its estimated 40-percent breakfast market share. —While green-lighting accelerated expansion worldwide,

Among the direct competitors that are beefing up or introducing breakfast menus are Wendy’s, Taco Bell and Subway. —While green-lighting accelerated expansion worldwide,

“We’ve been doing it for 30 years and have perfected it over the years,” Alvarez said. —While green-lighting accelerated expansion worldwide,

Alvarez hinted that newcomers to the morning daypart might find execution to be harder than they anticipated. —While green-lighting accelerated expansion worldwide,

He also noted that McDonald’s had carefully cultivated outstanding real estate for serving breakfast that eliminates a need for drivers to make left-hand turns onto restaurant property, resulting in higher sales volumes. —While green-lighting accelerated expansion worldwide,

The chain is exploring a value-priced breakfast menu, something that Burger King introduced in February, but McDonald’s officials downplayed the menu’s significance, saying there was no time-line for a rollout. —While green-lighting accelerated expansion worldwide,

“Our breakfast has good value already,” Alvarez said. —While green-lighting accelerated expansion worldwide,

As for new products, testing of the Angus Third Pounder burgers at 600 Southern California branches will be expanded to Boston and New York later this year, a spokesman said. —While green-lighting accelerated expansion worldwide,

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