McDonald's records 12% growth in region - Emirates24|7

McDonald's records 12% growth in region

(DENNIS B MALLARI)

 

McDonald's recorded 12 per cent growth in the Middle East in 2007 compared with just six per cent globally, a senior manager has revealed.

And now the US-based fast-food giant plans to increase the number of outlets in the UAE from 52 to 100 in the near future – with 10 openings planned for 2008.

The company is studying the impact of a 30 per cent increase in operating costs – particularly rent, food prices and transport charges – on its profit margins and will consider price increases if the inflationary pressure continues unabated. So far it has absorbed the higher costs rather than passing them on to customers.

"Our profit margins are definitely under pressure but we have not increased our prices," said Rafic Fakih, Managing Director of McDonald's UAE. "We cannot rule out price increases in the future and are studying market trends. If commodity prices and operational costs do not come down we will have to increase prices.

"The weakening of the dollar did not help us because we get most of our meat and other supplies from Asian and European countries – only the French fries come from the US.

'The impact of the declining dollar was negative for us – prices of most of our imported raw materials have gone up. But there is a possibility the high commodity prices may come down."

Fakih said Arab customers formed the majority of the three million customers, who visited McDonald's in the UAE every month.

"McDonald's has 33,000 outlets all over the world and there are 600 in the Middle East," he added.

"There are around 270 in the GCC region and we will have 100 in the UAE if the current economic growth continues."

He said an average McDonald's outlet in the UAE recorded between 700 and 800 transactions per day.

The growth of the business in the UAE has been high because it is a new market for the brand.

"While McDonald's restaurants are more than 50 years old in the US and Europe, it is only a 10-year-old brand in the UAE. The market is saturated in the US and Europe because there are McDonald's outlets in every nook and corner there – but there is a limited number of outlets in the UAE.

"With the development of new shopping malls and residential areas in the country we expect to open more outlets in the UAE."

He said Dh25 million would be invested in the 10 new restaurants to be opened this year.

 

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