McDonalds 2012 Annual Report Download - page 16

markets we will expand our innovative McBites line-up, introduce
existing products like our blended ice beverages and large
McWraps into new markets, and offer even more of the unique,
flavor-based promotional food events that have been successful.
We will emphasize our dayparts—like breakfast and extended
hours—that are still growing globally in both established and
emerging markets. We will enhance the customer experience by
continuing to reimage our building interiors and exteriors and by
providing our restaurant teams with the appropriate tools, training,
and technology. The accessibility efforts will include increasing
the level and variety of conveniences provided to our customers
through new restaurant openings, extended operating hours,
stronger value platforms, and faster, more accurate service
through innovative order taking. With operational and financial
discipline, we will execute these priorities to increase McDonald’s
brand relevance.
We will continue to build customer trust through our commit-
ment to sustainability—including nutrition and well-being, a
sustainable supply chain, environmental responsibility, employee
experience, and the community.
U.S.
In 2013, the U.S. business will focus on driving sales and guest
counts by enhancing the entire customer experience through the
pillars of the Plan and the three global priorities. Our menu pipe-
line is more balanced in 2013, with a continued focus on great
taste, quality ingredients and variety. We will satisfy our custom-
ers’ needs with the food they crave by balancing core favorites
with limited time offers and innovative new products across the
menu. Menu news will be augmented with brand messages that
highlight our quality food ingredients, efforts around promoting
children’s well-being and community involvement. We will
enhance our Dollar Menu and introduce new products to high-
light McDonald’s value at every price point, across all menu
categories. We are continuing our major remodel program by
updating about 800 locations in 2013. At the same time, we are
continuing to improve restaurant operations through appropriate
staffing and a focus on friendly, accurate service as well as
innovative order taking. In addition, we will increase the number
of restaurants that operate 24 hours a day and strive to be our
customers’ favorite eating-out destination.
Europe
In Europe, we see growth opportunities in breakfast, core menu
items, beverages, and extended hours. Our business plans are
focused on building market share by emphasizing value across all
dayparts and new restaurant growth. In some markets, our value
offerings will evolve from a low-end entry price to multiple entry
prices across our menu. This value menu evolution is intended to
grow guest counts with compelling affordability and enhanced
trade-up opportunities through an extended range of options. In
2013, we will reimage approximately 450 restaurants as we
progress towards our goal of having 100% of our interiors and
over 85% of our exteriors reimaged by the end of 2015. We will
also open nearly 300 restaurants. We will leverage production
and service enhancements by optimizing kitchen platforms and
accelerating the deployment of technologies, such as updating
the point-of-sale system and rolling out multiple order points via
self-order kiosks, hand-held order devices and side-by-side drive-
thrus. These initiatives will enhance the customer experience,
help drive guest counts and improve labor efficiency. We will also
continue to reduce our impact on the environment with energy
management tools. Despite the near-term headwinds due to
economic uncertainty and government-initiated austerity meas-
ures implemented in many countries, Europe offers significant
long-term opportunity, and we are well-positioned to capitalize on
this segment’s potential.
APMEA
In APMEA, we will advance efforts to become our customers’
favorite place and way to eat and drink by reinvigorating our long-
term value platforms, accelerating growth at breakfast, and
focusing on menu variety and convenience. Value will continue to
be a key strategy and growth driver to build traffic with a focus
across the menu at all dayparts, combined with trade-up strat-
egies to build average check. For example, Australia will evolve
its Loose Change Menu, and Japan will focus on building aver-
age check through trade-up opportunities with promotional
products and a focus on breakfast. We plan to grow breakfast
traffic in APMEA through increased marketing efforts, value,
accessibility and operations excellence. The markets will continue
to balance core and limited-time offers and will execute a series
of exciting food events that celebrate our core menu and the
segment’s all-time favorite product offerings. At the same time,
we will continue to leverage the diversity of the segment to
identify and scale new products and platforms. Convenience ini-
tiatives will focus on optimizing our drive-thru and delivery
services through operation efficiencies and online capabilities. In
China, for example, a new web-ordering system will enhance the
customer experience and drive new demand through delivery. We
will grow our business by opening approximately 850 new
restaurants and reimaging about 225 existing restaurants while
elevating our focus on service and operations. In China, we will
continue to build a foundation for long-term growth by opening
over 300 restaurants, consistent with our goal of reaching 2,000
restaurants by the end of 2013.
Consolidated
Globally, we will maintain financial discipline by effectively manag-
ing spending. In making capital allocation decisions, our goal is to
make investments that elevate the McDonald’s experience and
drive sustainable growth in sales and market share. We focus on
markets that generate acceptable returns or have opportunities
for long-term growth. We remain committed to returning all of our
free cash flow (cash from operations less capital expenditures) to
shareholders over the long-term via dividends and share
repurchases.
McDonald’s does not provide specific guidance on diluted
earnings per share. The following information is provided to assist
in analyzing the Company’s results:
• Changes in Systemwide sales are driven by comparable sales
and net restaurant unit expansion. The Company expects net
restaurant additions to add approximately 2.5 percentage
points to 2013 Systemwide sales growth (in constant
currencies), most of which will be due to the 1,135 net tradi-
tional restaurants added in 2012.
• The Company does not generally provide specific guidance on
changes in comparable sales. However, as a perspective,
assuming no change in cost structure, a 1 percentage point
increase in comparable sales for either the U.S. or Europe
would increase annual diluted earnings per share by about 4
cents.
14 McDonald’s Corporation 2012 Annual Report