Exhibit 99
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Investor Release
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FOR IMMEDIATE RELEASE FOR MORE INFORMATION CONTACT:
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03/26/98 Investors: Xxxx Xxxxx, 000-000-0000
Media: Xxxxx Xxxxxxx, 000-000-0000
McDONALD'S ANNOUNCES STRATEGIC INITIATIVES
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OAK BROOK, IL -- XxXxxxxx'x Corporation today announced important initiatives to
improve restaurant operations, enhance returns and reduce expenses. These
initiatives include the introduction of a new food preparation system in all
U.S. restaurants; a new financing approach to increase returns on new U.S.
restaurants for owner/operators and the Company; and plans to improve home
office staff alignment, focus and productivity, and to reduce selling, general
and administrative expenses.
Xxxxxxx X. Xxxxxxx, Chairman and Chief Executive Officer, said, "We are focused
on increasing shareholder value by growing sales and operating income, managing
capital and costs effectively, and using free cash flow and debt capacity to
fund ongoing share repurchases. Innovation has always played a key role in
McDonald's long-term success. These initiatives are examples of how we continue
to innovate and change to improve our customers' experience, motivate and reward
our owner/operators and strengthen shareholder returns. These changes are
significant and necessary for future growth.
Innovative Food Preparation
"Our extensive menu in the U.S. has created a challenge and an opportunity to
innovate food preparation. We are pleased to announce our new food preparation
system called 'Made for You' which through advances in equipment and technology
allows us to serve hotter and fresher food . . . at the speed of McDonald's. We
expect all U.S. XxXxxxxx'x restaurants will be using 'Made for You' by the end
of next year.
"This new system will deliver substantial benefits to customers as well as the
McDonald's System. The most important benefit to customers will be fresher,
hotter food . . . served fast. Restaurant managers and crew will benefit from
an easy-to-use system that takes the stress and guesswork out of delivering
great-tasting food. Owner/operators will benefit from reduced operating costs
as well as more satisfied customers and employees. Test results indicate food
cost savings of .2% to 1.4% of sales. Some restaurants also improved crew
satisfaction and reduced crew turnover, a significant benefit in the tight U.S.
labor market. Our 'Made for You' system also supports future growth through
product development because it can more easily accommodate an expanded menu.
"The average investment per traditional restaurant to implement the new system
is estimated to be approximately $25,000 or less. To underscore our commitment
to 'Made for You', we are prepared to provide financial incentives to McDonald's
owner/operators of up to $12,500 per traditional restaurant to defray the cost
of equipment made obsolete as a result of conversion to this new system. We may
also share additional costs in special cases where the conversion is more
extensive.
"We expect the final plan for the introduction of 'Made for You' to the U.S.
System to be approved in the second quarter and anticipate that a special charge
to operating income of approximately $170-$190 million will be recorded in the
second quarter 1998.
Innovative Restaurant Financing
"Through an innovative financing approach, we are offering owner/operators an
opportunity to lower their occupancy costs for new U.S. restaurants by buying
the restaurant building. Under this approach, we expect an owner/operator's
annual cash flow will increase by $15,000 per restaurant on average in the first
year, thereby increasing the value of their restaurant business. We also expect
this program to increase the Company's returns on new restaurants. We will
offer a similar program for U.S. restaurant relocations and rebuilds. We
estimate the Company's U.S. annual capital spending will be approximately $150 -
$200 million less under this new approach.
Improving Productivity
"Last year we reorganized our U.S. business by creating five U.S. divisions.
These divisional staffs, each led by a president, are directly focused on and
accountable for field operations. We are very pleased with the results of the
U.S. reorganization, which after only nine months has already brought increased
field-based focus on customer satisfaction. To continue our progress, we plan
to better align and streamline our home office functions to increase
productivity and provide more focused support for our field organization.
"We have appointed an internal management team, assisted by a consulting firm,
to undertake a comprehensive study of home office spending to determine
alignment, productivity and cost reduction opportunities. We expect to conclude
this study within the second quarter 1998, at which time we will quantify
anticipated ongoing savings and record any related charge for one-time costs."
Xxxx X. Xxxxxxxxx, Vice Chairman, Chairman and Chief Executive Officer U.S.A.,
said, "Our vision is to make McDonald's America's Best Fast Food Restaurant
Experience. These initiatives are part of ongoing efforts to achieve this
vision. Our goal is to be the best quick-service restaurant for customers, the
best place to work for employees and the best place to invest time and money for
franchisees and shareholders."
McDonald's is the largest and best-known global food service retailer, with more
than 23,000 restaurants in 109 countries and territories. On any day, even as
the market leader, McDonald's serves less than one percent of the world's
population. The Company plans to expand its leadership position through
convenience, superior value and excellent operations.
Forward-Looking Statements
Certain forward-looking statements are included in this release. They use such
words as "may," "will," "expect," "believe," "plan" and other similar
terminology. These statements reflect management's current expectations and
involve a number of risks and uncertainties. Actual results could differ
materially due to the success of business and operating initiatives including
those discussed in this release; and changes in business and economic
conditions; food, labor and other operating costs; consumer preferences,
spending patterns and demographic trends; availability and cost of land and
construction; accounting policies and practices and legislation and governmental
regulation.
