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McDonald's Shows Signs of Growth; Introduces Custom Cooking Line.

At recent annual meeting McDonald's Chairman and Chief Executive Officer Jack Greenberg noted, "In 1997, we set expectations for the business, and I am pleased that we exceeded many of those expectations. Most notably, we have had tremendous success in turning around the U.S. business."

He said the company's expectation now is for double-digit annual earnings per share growth in the range of 10 to 15 percent through 2002. This growth will be fueled by building sales at existing restaurants, through increased customer satisfaction and menu innovation, and by profitable expansion.

Part of this growth trend is McDonald's new food preparation system called "Made For You." Out are the burgers prepared with a standard list of trimmings and condiments waiting for you under the heat lamp. In comes the tailored-made, "hold the pickles please" burger made hot and fresh when you order it. The first priority in this area is enhancing the core U.S. menu to ensure existing products are the best they can be, says McDonald's.

With virtually all U.S. restaurants on the Made for You food preparation system by year-end, the company plans to complete the replacement of the Deluxe Line in the United States next year. McDonald's began to replace the Deluxe Line in 1998 with the introduction of the larger Filet-O-Fish sandwich. By mid-2000, the McDonald's Big Xtra! sandwich, which currently is in nearly 50 percent of the U.S. restaurants, as well as the new Grilled and Crispy Chicken sandwiches, will be national products. Restaurant unit growth is still top on the burger giant's mind, but mostly outside of the United States. Plans for next year include adding 1,800 to 1,900 restaurants systemwide, with about 90 percent of these in international markets.

When discussing the company's global growth opportunities, Greenberg pointed to McDonald's vision of being the world's best quick-service restaurant experience. He also discussed the system's focus on three key strategies: building the McDonald's brand; intense attention to people and their development; and driving enduring, profitable growth through innovation and technology.

Greenberg told investors that "McDonald's is committed to keeping selling, general and administrative expenses growing at a slower rate than sales and revenues; to completing our current $3.5 billion share repurchase program on, or possibly ahead of, schedule; and to enhancing return on capital."

McDonald's is the largest and best-known food service retailer, with more than 25,000 restaurants serving more than 40 million people a day in 117 countries. On any day, even as the market leader, McDonald's serves less than 1 percent of the world's population.
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Comment:McDonald's Shows Signs of Growth; Introduces Custom Cooking Line.
Publication:Food & Drink Weekly
Geographic Code:1USA
Date:Nov 15, 1999
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