McDonald’s allots P3 billion in 2019 for expansion, NXTGEN stores

MANILA, Philippines — Golden Arches Development Corp. (GADC), the master franchisor of the McDonald’s chain in the Philippines, is earmarking P3 billion next year to convert McDonald’s outlets into so-called NXTGEN stores and for continued expansion.

Amid rising inflation, the fastfood chain said it is also looking to increase prices by next year.

In a briefing, McDonald’s Philippines managing director Margot Torres said the firm is spending P3 billion for its capital expenditures (capex) next year, higher than the P2 billion allotted for this year.

“That capex is not just for NXTGEN stores but also includes expansion,” she said.

The NXTGEN store, which introduces a multi-point service platform including self-order kiosks, is the fastfood chain’s response to the growing and changing demands of Filipino consumers.

“This is our way of staying relevant to our customers, especially to the younger generation,” Torres said.

McDonald’s first NXTGEN store, located in McKinley West in Fort Bonifacio, opened last Oct.5.

Torres said the target is to have 10 percent of the total store count converted into NXTGEN stores next year, and bring it up to 70 percent by 2021.

To date, there are 604 McDonald’s outlets in the country, with five being NXTGEN stores including McDonald’s Madison (San Juan), Kapitolyo (Pasig), Robinson’s Galleria (Pasig) and Pioneer Reliance (Pasig).

Torres said the company expects to end the year with a total of 620 stores, with 15 NXTGEN outlets.

Through self-ordering kiosks powered by PayMaya Business at NXTGEN stores, customers can pay through their Mastercard and Visa card of any issuing bank.

Customers may also opt to pay in cash through dedicated lanes for ordering assisted by the modernized menu boards, and claim orders with the new split counter system.

Apart from the multi-point service platform, the NXTGEN store has modern interiors and a dedicated crew specially trained in hospitality to address needs of customers.

“McDonald’s NXTGEN is a strategic investment as the brand continues to grow in the country. Our goal is to provide a better and more relevant McDonald’s experience in a modern restaurant environment to more Filipinos,” McDonald’s Philippines president and chief executive officer Kenneth Yang said.

For its expansion, he said the fastfood chain is looking at opening more stores in the Visayas and Mindanao.

As the country’s inflation rate hit a nine-year high at 6.7 percent in September, he said the fastfood chain has also been affected just like other companies.

“For us, it definitely has had an impact on cost of sales, food costs. What we try to do is try to be more efficient so we don’t have to pass all cost increases to consumers,” he said.

Given higher food costs, Torres said there would be an increase in prices next year, but noted the uptick would not be higher than the inflation rate.

“We are very conscious we do not exceed what we project as inflation. We usually increase never above inflation. We are conscious of that because we want the customers to keep coming to McDonald’s and we do offer affordable food,” she said.

Yang said the company is still reviewing by how much prices would increase next year.

At the start of the year, the fastfood chain raised prices on certain meals, beverages and desserts in response to the implementation of the Tax Reform for Acceleration and Inclusion Law which slapped higher taxes on sugar sweetened drinks.