Financial sustainability, expired leases lead to decision
MCDONALD’S Philippines shuttered 30 stores last year after lease expirations and some concerns with financial sustainability.
Golden Arches Development Corp. (GADC), the master franchisee of the McDonald’s brand in the Philippines, posted a net loss of P967 million as of September last year, compared with the P1.2-billion net income in the same period in 2019.
Sales revenues fell 39% to P14.2 billion, with system-wide sales hitting P24.2 billion, mostly due to the impact of the stricter lockdown in the second quarter.
The company in an e-mail said that it opened 16 stores in 2020, and shut 30 as it assessed financial sustainability, leases expired, and lessors made redevelopment plans.
McDonald’s now has 655 stores in the country, down from 669 branches at the start of 2020 and falling short of a pre-pandemic growth pace that had led them to target running more than 700 stores by the end of 2021.
Malls during the lockdown experienced a significant decline in foot traffic, as many consumers stayed home and shifted to online shopping.
Only 38% of the fast food giant’s branches were operating during the stricter lockdown in March and April, and 84% were running at limited capacity by May.
GADC President and Chief Executive Officer Kenneth S. Yang in a forum last month said that the restaurant sector was one of the most affected by the lockdown last year. He expects continued lockdown restrictions to impede business recovery this year.
But Mr. Yang said the vaccination program would help improve consumer confidence, noting that the company must modify its operations to meet its customers’ health safety expectations. — Jenina P. Ibañez