OUR GROWING INVESTMENT

McDonald's corporate goals in the UK are to increase market share and profitability, to contribute socially and economically to the UK, and to achieve 100% customer satisfation.

McDonald's Restaurants Limited is a wholly owned subsidiary of McDonald's Corporation, and whilst the company is not listed on the UK Stock Exchange, our accounts are held at Companies House. Prospective shareholders, usually large institutions, purchase direct from the New York Stock Exchange.

Our UK restaurants completed 209 million customer transactions in 1992, leading to sales of 578 million compared with 515 million in 1991. This generated a gross operating profit of 65.5 million. A minor decline in profits over recent years has been due to our ambitious expansion programme - some 65 million was spent in the UK on restaurant expansion in 1992 - and to a lesser extent the result of the economic climate.

COMMITMENT TO THE UK

The UK operation is, first and foremost, a British company which employs primarily British people and places great importance on an active role in British society and business. For management purposes we divide ourselves into three operating regions - London and the South; Midlands, Anglia, the West and Wales; North of England, Scotland and Northern Ireland.

How we set about achieving our corporate objectives can be broken down into specific areas:

INVESTMENT AND EXPANSION

Our long-term commitment to the UK is illustrated in our purchase of freehold property whenever possible. To date we have spent over 800 million on freehold land, buildings and vehicles, a total which is increasing by 10% each year. 56% of our properties are freehold or have very long leasehold agreements.

We aim to open fifty new restaurants each year, and are expanding our prescence in non-traditional sites sucn as airports, railway stations, supermarkets and our restaurant at Guy's Hospital in London which opened in December.

FRANCHISING

We have ambitious plans to expand our franchising programme, through which we provide full support to the independent franchisee in return for commitment to maintaining the standards required by McDonald's.

At the end of 1992, 52 out of our total of 472 restaurants were run by our franchisees. We aim to increase this number by 40-50 each year so that some 30% of our restaurants will be franchised by 1995. Further expansion is then planned for the following five to ten years.

PRODUCT DEVELOPMENT AND MARKETING

We constantly seek to add value to the McDonald's brand and enhance its reputation amongst our custmers. This includes the development of new products, such as the Pizza, to meet the changing tastes and demands of our customers and to provide greater choice whilst ensuring that our products meet the requirements of a balanced diet.

With over 1 million customers a day in the UK, each spending on average 2.75, we need to constantly monitor customer trends.

We spent over 33 million on marketing in the UK in 1992 to reinforce our position as the consumer's favourite quick service restaurant. This included a popular TV and radio advertising compaign featuring the theme line 'There's nothing quite like a McDonald's.'

FUTURE COMMITMENT

We are proud of our work to date in the UK, but we still have a long way to go. During a difficult economic climate we have been able to continue to invest substantially in the UK, both through our purchase of property and through the business that we bring to UK suppliers. Our growth plans mean that such investments will continue to grow.

That can only be good news, not just for the suppliers who benefit, but for the UK economy as a whole.



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