McDonalds 2000 Annual Report Download - page 4

The 120 countries
in which we
operate represent
95 percent of the
world’s purchasing
power. Yet, we
feed less than
1 percent of the
world’s population
on any given day.
2 Letter to shareholders
1,500 to 1,600 McDonald’s restaurants and are
focused on increasing sales at existing restaurants.
In the U.S., we already are seeing the bene-
fits of our investment in the Made For You food
preparation system with improvement in cus-
tomer ratings of the taste and freshness attributes
of our food. In addition, Made For You has
provided the platform for new product additions,
including the introduction of our New Tastes
Menu this past January. This menu has the
potential to create a permanent branded category,
similar to our Extra Value Meal approach. We
also are developing aggressive plans to double
our sales in the U.S. over the next 10 years,
and triple owner/operator cash flow—primarily
through our existing restaurants.
In Europe, we are increasing menu variety
with pork and chicken selections, building our
breakfast business and offering customers great
value. Also, as much of the European community
unites in one currency, we will leverage the
McDonald’s System to cut costs and achieve
additional synergies.
In Asia/Pacific, we will continue to focus on
our traditional menu and add products that reflect
the popularity of chicken. We will also explore
other ways to best meet local preferences.
And, despite the current economic challenges,
we see Latin America as a great market for our
business long term given its large population,
strong family emphasis and young demographics.
So, we will continue to emphasize value, building
our brand and growing market share. By develop-
ing a loyal customer base, we will be poised for
growth as the economies begin to improve.
We will continue to support our ongoing
global growth with innovation and technology.
Our future includes a Web-enabled system of
restaurants and cashless electronic transactions.
In addition to growing the McDonald’s restau-
rant business, management is developing new
avenues for future profitable growth, primarily
through our Other Brands.
We know that there are a number of distinct
meal occasions that McDonald’s does not
meet—when you want pizza or ethnic food, for
In the United States, where competition is
intense, the percent increase in operating
income was in the high-single digits on a 3 per-
cent sales increase. Notably, the U.S. business
has posted positive comparable sales in 11 of
the past 12 quarters, an excellent indication of
our momentum. And in Europe, Asia/Pacific and
Latin America, sales in 2000 increased 9 percent
in constant currencies. As mentioned earlier,
there have been consumer concerns about the
beef supply in certain European markets.
However, because of our product specifications
and the trust customers have in McDonald’s, this
issue has affected our sales much less than those
of others. And as shareholders, you also can
trust that McDonald’s is committed to adhering
to the highest safety standards in the world and
always meets or exceeds government standards.
Given the tough business environment, our
gains were modest. Nevertheless, we were able
to extend our lead in virtually every market in
which we do business, as it was even tougher
for many of our competitors.
McDonald’s total return to investors over the
past 10 years was 17.5 percent. But the reality is
our stock did not perform well in 2000. Although
our overall financial performance was good, it
was not as good as we expected, and this was
reflected in our stock price.
Looking ahead, our financial goals are to
continue growing earnings per share, to increase
return on investment and to grow shareholder
value at a rate that our investors expect and
deserve.
Turning to another investor expectation—
leadership—I am very pleased with the progress
our team made last year in adapting to local
market conditions and in innovating to move the
business forward. Perhaps more importantly, we
intend to build on that progress.
We will continue to tap into the tremendous
opportunities that exist for McDonald’s. The 120
countries in which we operate represent 95 per-
cent of the world’s purchasing power. Yet, we
feed less than 1 percent of the world’s popula-
tion on any given day. In 2001, we plan to add