McDonald’s to open fewer new stores than planned thanks to COVID-19

Fast food company McDonald’s Philippines is aiming to open 15 more stores in the country this year as expansion was hampered by the ongoing pandemic, the company’s top executive said in a digital briefing on Tuesday.

“With the crisis, we’ve had to adjust our plans but this year we continue to [expand] although it’s a lesser number of stores,” Kenneth S. Yang, President and CEO of McDonald’s Philippines, said during the briefing.

McDonald’s Philippines currently has 668 stores nationwide, more than 50 of which opened in 2019. Ninety-three percent of its stores are now open as lockdown restrictions are easing and dining in is allowed, albeit at a limited capacity.

“[Expansion] is something we have to continue to assess as time goes on though. And let’s see how the economy will be able to sustain additional growth,” he explained.

“In the spirit of transparency, with the lockdowns, our revenues have been severely impacted and while sales is slowly coming as we are in [general community quarantine], it is still far from where we were before,” Margot Torres, managing director of McDonald’s Philippines, said in the same briefing.

General community quarantine is a looser form of lockdown where people can go out of their homes, work, and dine at restaurants which can operate at a limited capacity.

Ms. Torres said that during the strict lockdown period from March to May, only 50% of their stores were open and the company had to rely on deliveries and drive-through orders for sales, with deliveries growing three times against pre-COVID-19 numbers.

Of those restaurants that were open, they only made “50%-60% of [regular] sales” because of limited hours and limited service channels allowed (delivery, drive through, and takeout).

Deliveries accounted for 30% of total sales while drive through orders accounted for “the biggest share of the business,” with over 40% of orders done via drive through — which is notable because only 50% of McDonald’s stores offer drive through services, said Oliver Rabatan, marketing and brand extensions director, at the briefing.

“When the crisis hit and we were on lockdown we couldn’t do dine-in so we had McDelivery, drive-through, and the digital channels to enable that and… as a we continue and the lockdowns ease and people start to have confidence to go out and dine out, we should also see our sales improving. But in the meantime, we will try to take advantage [and] exploit all these channels that are available to us,” Mr. Yang said.

The company expects to return to its pre-COVID-19 levels by 2021 and “normalcy” will be re-established by 2022 to 2023 though Ms. Torres said that the definition of “normal” may be different by then.

The same briefing also presented the safety measures put in place inside McDonald’s stores, including filling up a health declaration form, table service, frequent cleaning of high-touch surfaces, and taking temperatures of both customers and staff. — Zsarlene B. Chua