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McDonald's Outlines $6 Billion National Plan to Build, Renovate Restaurants

Chain to Focus on Modern Dining Rooms, Self-Order Kiosks
August 14, 2018

McDonald’s Corp. is using its substantial real estate holdings across the United States to fend off competitors eating into its bottom line.

The fast-food chain is outlining its spending plans for new dining rooms and digital self-order kiosks for the company and its franchisees in specific states as part of its previously announced $6 billion plan to modernize most of its 14,000 U.S. restaurants.

The improvements will include new menu boards, remodeled counters to allow for table service and new parking spots for curbside pickup.

In Florida, the $186 million initiative involves 240 of its more than 900 restaurants and will include building new locations and renovating existing ones in 2018 and 2019. But the chain is not disclosing how many restaurants will be built or which locations will be renovated, a spokeswoman said.

In New Jersey, another high-population market, McDonald's will spend $155 million to build and renovate restaurants through 2019. That will include 160 of its 260 locations in the Garden State.

McDonald’s and its franchisees are investing even more money in the modernization of restaurants in California, where it will spend about $390 million on 550 restaurants. In New York, the price tag for 360 restaurants is $320 million, while in Ohio it will cost $250 million to upgrade 380 eateries.

In the second quarter, the global quick-service restaurant company saw its total revenue slide 12 percent, to $5.35 billion, though net income rose 7 percent, to $1.5 billion. Same-store sales in the U.S. increased 2.6 percent.

Despite the generally upbeat quarterly numbers, McDonald’s needs to take steps to freshen up its concept and dining experience in an increasingly competitive fast-food environment, analysts say.

"We remain focused on delivering the most enjoyable experience for every customer, every visit,” McDonald’s President and Chief Executive Steve Easterbrook said in the company's second-quarter earnings statement. “Whether that is when they visit a modernized restaurant with inviting hospitality or through the convenience of having delicious food delivered to their home, we know that our fundamental day-to-day commitment to our customers is running great restaurants."

The upgrades and renovations will require a “significant construction investment,” will aim to make new technology available to patrons and create “a more engaging customer experience,” according to the statement.

In addition to investing in restaurant modernization, McDonald’s also has introduced a so-called McDelivery service via Uber Eats at more than 5,000 U.S. restaurants, and recently tripled crew tuition assistance for restaurant employees by allocating $150 million over five years to its global Archways to Opportunity employee education program.

The Chicago-based chain has more than 37,000 locations in 100 countries.

Richard Lackey, a retail and restaurant consultant in Palm Beach Gardens, FL, noted that complacency has killed many chains through the years. He said it behooves McDonald’s to launch a plan to improve the customer experience in what may be the most competitive restaurant environment in generations.

“We have to hand it to McDonald’s,” Lackey said. “They’re smart enough to realize that they have to continually improve in every respect because you have to re-excite existing customers and work on things to bring in new customers.”

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