McDonald's Plans Big Changes in Coming Year

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McDonald's Plans Big Changes in Coming Year


OAK BROOK, Ill. -- The new year will bring some big changes for McDonald's as it readies a $2.9-billion capital expenditure plan for 2012. The plan calls for 1,300 new restaurants both domestically and internationally, as well as reimaging efforts at 2,400 existing locations.

The quick-service restaurant's 2012 goals came to light as CEO Jim Skinner and members of senior management detailed the continuation of its nine-year "Plan to Win" strategy at the company's investor meeting on Thursday.

"Over the past nine years, the Plan to Win has been the right blueprint for McDonald's and remains relevant today. It has enabled us to perform well in both robust and challenging economic environments. Most importantly, the plan is supported by our unparalleled competitive advantages in size and scale, our financial strength and our system alignment," Skinner said in a company release.

CFO Pete Bensen said the company is operating from a position of strength and now is an opportune time to accelerate new store openings and reimaging to modernize the brand. "We have the financial resources and discipline to invest wisely, and given our strong returns, we are increasing our capital expenditures to about $2.9 billion for 2012," he explained. "The first priority for our significant cash flow remains reinvesting in our business to be increasingly relevant to our customers. After that, we expect to return all of our free cash flow to shareholders over the long term through a combination of dividends and share repurchases."

McDonald's leaders also reiterated the company's constant currency growth targets, including average annual sales growth of 3 percent to 5 percent; average annual operating income growth of 6 percent to 7 percent; and return on incremental invested capital in the high teens.

"We are intensifying our efforts behind three global priorities that represent our greatest opportunities under the Plan to Win -- optimizing and evolving our menu, modernizing the customer experience and broadening accessibility to our brand," COO Don Thompson noted. "I am confident in our strategies and the ability of our talented system to execute against these priorities as we drive toward our mission to become our customers' favorite place and way to eat and drink."

McDonald's is targeting sales growth through menu innovation, Thompson said, specifically in beef, chicken, beverage, breakfast and dessert products. The company plans to test or soon import from foreign markets for U.S. testing the Pub Burger, the 1955 Burger, large chicken wraps, McBites popcorn chicken, the Cherry Berry Chiller frozen beverage, the Magnum McFlurry and blueberry–banana oatmeal, according to Nation's Restaurant News.