MCDONALD’S Philippines is increasing its capital expenditure (capex) to P3 billion for 2019, as it opens new stores and upgrades existing ones with self-paying kiosks.
“Next year, we expect the capital investment to grow by 50% so we’re looking at P3-billion capex. And that capex, not just for NXTGEN but it also includes the expansion plans so it includes continuing our expansion plan of opening stores… The new stores will already be offering this service platform (NXTGEN),” McDonald’s Philippines Managing Director Margot B. Torres told reporters during the launching of the company’s NXTGEN store in McKinley West, Taguig.
McDonald’s Philippines’ NXTGEN stores feature self-paying kiosks where customers can place their orders and pay for meals using Visa or Mastercard credit, debit, or prepaid cards. Customers can pick up their orders at the claim counter.
“By 2019, 10% of our store base will already be NXTGEN but the goal is to convert by 2021 into NXTGEN 70% of the stores,” Ms. Torres said.
McDonald’s Philippines tapped PayMaya for the self-ordering kiosks, which are currently available at branches in Kapitolyo (Pasig), Robinson’s Galleria (Pasig), Madison (San Juan), and Pioneer (Mandaluyong).
“Through our respective innovations we hope to transform the experience of McDonald’s customers whenever they order their favorite food, and push the adoption of the ‘cashless’ lifestyle by more Filipinos,” Paolo Azzola, chief operating officer and managing director at PayMaya Philippines, said in a statement.
With the opening of the McKinley West branch, McDonald’s Philippines currently has 604 stores. It targets to end the year with 620 stores nationwide.
“A higher percentage will be opened in Visayas, Mindanao. 20% to 30% in Mindanao. We just opened a week ago in Iloilo, Davao and also in Surigao,” McDonald’s Philippines President and Chief Executive Officer Kenneth S. Yang told reporters.
At the same time, Mr. Yang said the fast food giant is currently reviewing prices of its offerings, which may increase next year.
“We’re still reviewing, but we try to be below inflation. We try to absorb some of the increases so we will not pass on all the increases to customers,” Mr. Yang said, adding the company sources 70% of their products locally.
Inflation surged anew in September to a fresh nine-year high. Prices of basic goods and services jumped by 6.7% in September, rising from 6.4% in August to mark the ninth straight month of increase, the Philippine Statistics Authority (PSA) reported last week.
Ms. Torres said McDonald’s Philippines increased prices at the start of the year due to the sugar-sweetened beverage tax imposed by the government.
“In the menu items, not everything increases across the board, so we also choose the items that we believe are not price sensitive. And then we even commit to items to not increase their price and keep it a price point because it is purchased by the mass market, we have done that through the years,” she said.
As an example, Ms. Torres pointed to its McSaver meal which has been pegged at P59 for several years until it was increased to P65 when the sugar tax was imposed.
“Pero di pa rin namin ginagalaw despite the increase in bigas, inflation (But we haven’t increased prices of McSaver meals despite higher rice prices, inflation). It is still at P65,” she added.
Ms. Torres noted the company faced challenges with the typhoons and the closure of Boracay island, where it had two profitable branches.
“There were challenges we faced in June, July, August. Everybody was affected by weather, there were more storms this year versus last year. We were also challenged by closures that we did not anticipate, specifically for Boracay… We had to close one and we kept one open but of course, because of the island closure, the sales really dropped. We were also affected by the scarce supply of sugar,” Ms. Torres said. — Reicelene Joy N. Ignacio