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The big Mac.

 While the stock market has been collapsing, shares in McDonald’s quietly hit an all-time high last week of $281.50. Since 1974, when the Golden Arches first landed in Woolwich, southeast London, the fast-food giant has ridden out scandals and the rise of healthy eating to become more popular than ever. The problem for McDonald’s, if you can call it that, is that hundreds of its 1,400-plus restaurants across the UK and Ireland are now simply too busy. With a fifth of its customers directly ordering home deliveries, McDonald’s UK online arm alone is said to be bringing in more than £1 billion in sales annually, more than KFC’s entire British business.

The sheer number of couriers darting in and out of restaurants to service those online customers means that about half of McDonald’s sites may be trading at or beyond their capacity within a few years. «We have had to think about the experience of someone walking in and ordering a meal for table service with their family and not being disrupted by a courier collecting a delivery order,» said Alistair Macrow, chief executive for McDonald’s UK and Ireland. «We have many restaurants operating out of footprints designed when the only three options for customers were drive-thru, eat in or walking in for takeaway». So as well as the drive-thrus, McDonald’s is on the lookout for «drive-to», small restaurants designed to cater primarily for click-and-collect orders.

The fast-food giant is also looking for home delivery hubs, which will cut back heavily on restaurant space to make room for couriers picking up online orders and dark kitchens in industrial parks. On top of that, McDonald’s and its franchisees are spending £250 million to re-configure 800 restaurants over the next four years. The intention is that online orders can be prepared and served in a way that does not compromise the experience for those eating in. Each day, McDonald’s feeds almost 1 per cent of the world’s population from 40,031 restaurants in 119 countries.

Much of the credit for where McDonald’s finds itself today goes to Steve Easterbrook, who wrestled the company out of a stupor when he took charge in 2015. Easterbrook slashed layers of middle management, started online delivery and pushed franchisees to install digital ordering boards. Those improvements and rock-bottom prices helped McDonald’s see off the competition. «Their expansion just re-emphasised what good value for money McDonald’s is.

You can go to Five Guys and feed your family for £60 or go to McDonald’s and do it for £30,» said Graeme Smith, a consultant with AlixPartners. The happy marriage between McDonald’s and Easterbrook ended two years ago when Easterbrook was fired over a sexual relationship with a subordinate. These days, McDonald’s takes much more care in preserving its reputation than in years gone by. One of its biggest own-goals came in a 1997 legal case known as «McLibel», in which McDonald’s successfully sued environmental activists Helen Steel and David Morris for falsely claiming it was responsible for starvation and deforestation in the developing world.

« If McDonald’s wants to go beyond ‘McGreenwash’... it needs to shift to meat-free alternatives urgently». McDonald’s, which introduced the McPlant vegan burger this year, aims to achieve net-zero emissions across its entire UK business and supply chain by 2040. McDonald’s has introduced salads, packets of fruit and carrots to the menu. While McDonald’s sales are set to soar, its profit margins are under pressure.

The growth of home delivery, which McDonald’s outsources to Uber Eats, will inevitably dilute McDonald’s super-sized margins. One fast-food executive estimated the current inflationary surge would leave McDonald’s paying 30 per cent more for food and that it would inflate prices by an average of 20 per cent over this year and next combined. For example, McDonald’s hiked the price of a cheeseburger by a fifth to £1.19 in July, the first increase in 14 years.

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  1. Erica13 November 2022 at 13:13


    The first increase in 14 years for the cheeseburger? That's not ok I think. I know we all want lower prices but 14 years is too much. An increase in prices every 4-5 years (a reasonable increase) seems ok. Also, McDonald's should offer more alternatives to cater more clients. Meat-free alternatives, fruits and vegetables should be made available.

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