McDonald's to spend up to $3 billion on new restaurants, remodeling

Thu Nov 14, 2013 1:10pm EST

A McDonald's restaurant sign is seen at a McDonald's restaurant in Del Mar, California April 16, 2013. McDonald's Corp will announce its earnings on April 19. REUTERS/Mike Blake

A McDonald's restaurant sign is seen at a McDonald's restaurant in Del Mar, California April 16, 2013. McDonald's Corp will announce its earnings on April 19.

Credit: Reuters/Mike Blake

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(Reuters) - McDonald's Corp (MCD.N) on Thursday said it plans to spend $2.9 billion to $3 billion next year to open 1,500 to 1,600 new restaurants and remodel about 1,000 others - roughly in line with this year's reduced spending forecast.

The world's biggest hamburger chain, which recently has struggled to meaningfully expand sales at established restaurants after years of outpacing its rivals, last month trimmed its 2013 capital spending outlook by $100 million to $3 billion and delayed some new restaurant openings until next year due to softness in China and some other emerging markets.

The company known for Big Mac hamburgers and skinny, crispy french fries also offered 2014 forecasts for commodity costs and other expenses.

It expects overall commodity costs for 2014 to increase 1 percent to 2 percent in the United States and 1.5 percent to 2.5 percent in Europe.

It also expects general and administrative costs to increase about $200 million, due to such factors as higher employee expenses and costs associated with its owner/operator convention and Winter Olympic sponsorship.

McDonald's also repeated its prior forecast for 2014 overall same-restaurant sales growth of 3 percent to 5 percent, operating income growth of 6 percent to 7 percent, and return on incremental invested capital in the high teen percentages.

Shares in McDonald's were down 0.8 percent at $97.35 in extended trading.

(Reporting by Lisa Baertlein in Los Angeles; Editing by Steve Orlofsky and Nick Zieminski)

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Comments (1)
ALAN_PW7 wrote:
Written with the investor/buyer in mind….
The more realistic expectations are commodities to increase three to five and a half percent, not just on food stuffs but on packaging and distribution (fuel??) costs. Fuel alone will go up ten percent this next year.
Operation costs will depend on their increased cut of the pie. Management will get how much of a salary increase(with bonuses and perks)expect close to five percent. Regular management, office workers, will go up about three percent.
A larger cut for remodel and expansion will dull the blow due to slower or stagnant sales.
Sales will increase due to higher prices not higher sales volume. Income is income, I suppose.
I would buy/hold the stock while the management plays with smoke and noises. The smoke will clear and the noise will abate in time an,d the hope is for better economy and more income for workers to spend.
But that is just my guess….LOL

Nov 14, 2013 5:06pm EST  --  Report as abuse
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