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'Healthy' rebranding brings diners back to McDonald's

25/01/2006

Attempts by McDonald's to rebrand itself as a healthy deli-style food outlet appear to be paying off, with the fast food giant announcing a significant increase in both revenues and sales in 2005.

The world's most popular burger chain saw global revenues increase by seven per cent last year, while like-for-like sales rose by 4.2 per cent in the final quarter of 2005.

McDonald's saw the most impressive sales growth in the US, while its European restaurants, which had seen a sharp downturn in custom over the previous few years, also saw sales rise by 2.6 per cent over the year as a result of strong growth in France, Russia and Germany.

Jim Skinner, chief executive of McDonald's, believes that the positive figures are testament to the success of the firm's rebranding efforts.

"Our customers rewarded us by visiting our contemporary, reimaged restaurants more often to enjoy our broad range of quality menu choices along with our convenience and branded affordability," he said.

"Our performance reflects the ongoing strength of our US business where we continue to leverage our convenience and build upon the successful initiatives launched over the past few years, including appealing menu additions, extended operating hours and cashless payment options."

He added: "We will continue to build on our momentum in this important area of the world by strengthening our connection with customers through improved communication of our product quality, brand relevance and commitment to balanced, active lifestyles."

As a result of the strong figures, Mr Skinner announced plans to return up to $6 billion to shareholders during 2006-7, as well as a planned repurchasing of $1 billion worth of McDonald's shares during the first quarter of 2006.

McDonald's also plans to invest $1.8 billion in a new restaurant drive which will see 800 new outlets open worldwide this year.

It predicts further sales and revenue growth of between three and five per cent this year and annual operating income growth of between six and seven per cent.

The firm introduced its so-called Plan To Win rebranding drive after a raft of negative publicity, culminating in the 2004 film Supersize Me, saw it come in for criticism over its unhealthy products and customer numbers fall for the first time in its history.

It has introduced a number of healthier menu options over the past 18 months, including salads, deli sandwiches and grilled chicken strips.

And it seems that the new menu options are having the desired effect as consumers who had shunned its burgers and fries are returning to sample its new range of products.

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