McDonalds 2002 Annual Report Download - page 21

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Mexico is among
our more
promising mar-
kets in Latin
America. However, it wasn’t
long ago that we turned an
economic challenge in that
country into a sales- and
profit-building opportunity.
The devaluation of the
Mexican peso in late 1994
had an immedi-
ate and dramatic
effect through-
out the country.
With the result-
ing decreases in
disposable income, our
sales and profits in Mexico
declined sharply.
So, we reinvented the
way we do business. For
example, we began selling
cones at an exceptional
value so that a family visit to
McDonald’s was still afford-
able. We drove down costs
by working with existing
suppliers to create new effi-
ciencies. We also significantly
limited our exposure to out-
side currencies by develop-
ing new local suppliers. In
addition, as appropriate, we
renegotiated leases with
landlords to better reflect
the economic environment
in which we were operating.
As the economy and
our business started to
improve, we introduced a
breakfast menu to build
sales and transactions. We
appealed to local taste pref-
erences with
egg offerings
featuring
jalapeño pep-
pers and refried
beans—locally
grown ingredients that fur-
ther protected profits from
swings in foreign currency
exchange rates.
Although 1995 was a
difficult year, our efforts
paid off. During the following
four years, our comparable
sales increases in Mexico
averaged more than 20 per-
cent. Today, we are sharing
the learnings from our
experience in Mexico with
our people in other coun-
tries with local economic
challenges.
22
we are sharing
the learnings from
our experience in Mexico
with our people
in other countries
Mexico
IT’S 5:00 P.M., and a
family is enjoying an early
dinner, complete with
Happy Meals for the kids,
at the Tollocan McDonald’s
in Toluca. Other young-
sters are having fun in the
McDonalandia, a test play
space with a variety of
activities for children of all
ages. Families are a very
important part of our
business in Mexico. In fact,
Happy Meal transactions
in Mexico are among the
highest in the world, as
extended families visit our
restaurants for affordable,
satisfying meals.