Must-know: McDonalds' 2Q14 earnings (Part 3 of 5)
Initiatives to improve same store sales
McDonald’s (MCD) plans to open 1,500–1,600 new stores. It’s re-imaging another 1,000 existing locations in 2014–2015. Globally, McDonald’s has opened 461 new restaurants through June, 2014.
McDonald’s had 35,683 restaurants at the end of June, 2014. Yum Brands (YUM) had 40,419 restaurants and Burger King (BKW) had 13,677 restaurants.
The management plans to revive the U.S. markets by improving customer experience through menu personalization, speed and accuracy of service , re-imaging restaurants, and digitally engaging customers. The company has re-imaged 90 stores in U.S. as of June, 2014.
To turn around the negative trend in the German market, the management is focused on improving food quality and its value perception. The company has re-imaged 100 stores in Europe as of June, 2014.
According to McDonald’s, China’s market has been volatile. Last year this market was affected by Avian influenza. This year its image is tarnished by a meat scandal in which a local broadcaster, Dragon TV, aired workers processing expired meat. For the Australia market, McDonald’s will focus on the “loose change” menu and McCafe beverages to drive sales. As for Japan, the company is facing competition-driving sales. McDonald’s plans to reinvigorate this market by focusing on the family and happy meal menu. The company has re-imaged 120 stores in Asia/Pacific, Middle East, and Africa (or APMEA) as of June, 2014.
Investors who would like to gain exposure to the overall restaurant industry can invest in exchange-traded funds (or ETFs) like the PowerShares Dynamic Leisure and Entertainment ETF (PEJ) and the PowerShares Dynamic Leisure and Entertainment ETF (PBJ).
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