"We had our best global comparable sales performance in 17 years," noted Jim Skinner, CEO of the company, in Friday's fourth-quarter earnings call, "because our focus never wavered." Skinner succeeded to that position in November following the resignation of Charlie Bell, president and CEO since 2002, who was ill with cancer. Bell, 44, died on Jan.16.
"For two years, we're pursued the strategy of being better, rather than being bigger," Skinner continued. "It is a winning formula. We served 1.6 million more customers every day over the past 12 months. We are providing a better experience, from faster service and added convenience like cashless payment and extended hours, to cleaner dining environments."
He stressed, however, that the transformation of the chain isn't over yet. "In 2005, we're going to take our restaurant operations improvement process, which has been so successful in the United States, to our top 10 international markets."
In the United States, comp sales for the chain were up 9.6% in 2004, compared with 2003. "In 2004, multiple initiatives worked together to make it a good year," said Mike Roberts, the company's new president and COO, noting the products like salads, McGriddles and Chicken Selects did well. "We will launch new products in 2005, such as the fruit and walnut salad this spring, and premium chicken sandwiches in the second half of the year, but we will also continue our emphasis on our core menu."
Also, the company plans to renovate some 1300 of its U.S. restaurants this year—a process it calls "reimaging"—compared with the 1100 renovated in 2004. "These restaurants are generating comp sales of 5% above the marketplace, and are being met with positive customer response," Roberts noted. The chain plans to open about 220 new restaurants domestically this year.
Other markets continue to grow as well. In news that would have been astounding only a generation ago, the growth markets in Europe now for McDonald's, according to Roberts, are France and Russia—the majority the 130 McDonald's opening in Europe this year will be in those two countries. Comp sales in Europe for the chain were up 2.4%, not as healthy a rise as elsewhere, but better than in recent years, he added.
In Asia, comp sales for 2004 were up 5.6% compared with '03. In Asia, the Middle East and Africa combined, the company plans to open about 270 restaurants, with the majority of them in China and Japan. "China continues to be one of our biggest growth opportunities, and we will open about 100 restaurants there this year," says Roberts.
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