‘No rush” in McDonald’s Singapore sale

Despite shortlisting several bidders for the McDonald’s Singapore and McDonald’s Malaysia franchise rights, Malaysian subsidiary Golden Arches Restaurants says it is not in a hurry to sell.

MD Azmir Jaafar says the deal is being discussed with the shortlisted bidders, but no time frame has been set to complete the transaction.

“We want to find the right partner who understands the local market and can ensure continuity of McDonald’s value and tradition, as well as be backed by strong capital.”

He says it has always been the group’s idea to sell the franchise rights to a local partner, which would be more efficient than management by a corporate entity.

McDonald’s Corp announced a revamp of its ownership models throughout Asia in July, including plans to offload its China, Hong Kong, Malaysia, Singapore and South Korea master franchises.

CEO Steve Easterbrook’s plan covers about 4000 restaurants with an ultimate goal of having at least 95 per cent of the group’s restaurants franchised.

Meanwhile, Azmir says that as the Malaysian deal is a business transaction “we will ensure the valuation is done properly”.

“Still potential”

There are 260 McDonald’s restaurants in Malaysia, with Golden Arches managing 200 and the rest in the hands of a third party. Though Malaysia has a population of only about 30 million people, which is relatively smaller than China and Indonesia, Azmir still sees huge potential in the market.

“There are still many underserved areas,” he says. “As the government is improving the infrastructure in Sabah and Sarawak, I think we can expand our footprint into Kota Kinabalu and Kuching and other cities.”

Azmir says the company intends to open 30 stores in the Klang Valley, Johor, Melaka and Penang as well as Sabah and Sarawak in the next three years. Five to seven new stores are targeted for this year, with one in Presint 2, Putrajaya, and another in Chukai, Terengganu, already open.

“Our expansion plan is focussed on stand-alone stores as this model works very well, especially in terms of accessibility and convenience. Our ultimate goal is to have 500 stores in the country.”

Azmir says the company also intends to renovate and remodel up to 30 outlets, each to cost about RM1 million (US$241,700). They have been open for nearly 30 years and will also have their technology upgraded.

Combined, McDonald’s Singapore and McDonald’s Malaysia have enjoyed record sales in the past few months and is still targeting higher double-digit growth this year.

Even following the introduction of the goods and services tax in Malaysia in April last year, Azmir says the company raised its selling prices by only about 1 per cent to offset the higher raw-material cost.

He believes McDonald’s has captured up to 42 per cent market share in the Malaysian fast-food market.


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