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Tue 23 Aug 2011 08:24 AM

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McDonald's says menu prices to hold steady in UAE

Franchisee says sales offsetting food costs, eyes 100 stores in UAE by year-end

McDonald's says menu prices to hold steady in UAE
Emirates Fast Food hopes to operate 100 McDonalds outlets in the UAE by the end of the year

Fast food chain McDonald's said a seven percent rise in sales has helped it hold the cost of meals steady in its UAE outlets, despite a jump in the cost of raw ingredients.

Emirates Fast Food, which operates the UAE arm of the US-based franchise, said it expects to open eight to ten new stores annually for the next five years as it looks to grow its market share.

“Due to our growth in sales we have been fortunate enough so far to be able to absorb the increase in the cost of raw food,” managing director Rafic Fakih told Arabian Business.

“We recorded a seven percent growth in sales in the first two quarters of this year compared with the same period in 2010. We are expecting this to reach double digit growth in the third quarter of 2011,” he added.

Global food costs are expected to remain high and volatile throughout this year and into 2012 despite record food production, the United Nations Food and Agriculture Organisation warned in June.

The Dunkin’ Brands Group this month said its franchises are raising prices at stores to help cover the higher costs of key ingredients such as coffee and milk.

Dunkin' Donuts increased some prices during the second quarter while the owners of ice-cream brand Baskin-Robbins have said they would raise prices in the third quarter.

LA-based McDonald’s Corp has continued to outperform the market, posting better-than-expected results in August. The world’s largest hamburger chain said sales across Asia Pacific, Middle East and Africa increased 4 percent, 5.3 percent in Europe and 4.4 percent in the US as it sold more smoothies and drinks in the US and saw its breakfast sales increase in Europe.

McDonald's “is outperforming its peer group and it's outperforming the market,” Lazard Capital Markets analyst Matt DiFrisco told newswire Reuters.

Emirates Fast Food, which currently operates 92 McDonald’s outlets in the UAE, said it had opened 7 new restaurants so far this year and aimed to reach 100 by the end of the year.

“Our goal is to reach 100 stores by the end of this year or at latest by mid-2012,” said Fakih, adding the stores would be funded through “self investment”. 

“Our plan is to open eight to ten stores annually, but of course this is relies on many aspects such as the economy, growth and demographics in the UAE,” he said.

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