McDonald's to open 200 new restaurants in growth drive

McDonald's plans to open over 200 restaurants across the UK and Ireland over the next four years in a £1bn expansion drive.

"Drive to" restaurants - with a car park, a small seating area, and no drive-through - and "other smaller formats" will be tested as part of the new offer.

The move would increase the fast-food chain's UK and Ireland footprint by over a tenth to 1,700 sites.

One retail expert said the company is doubling down on more "stable" markets as boycotts arising in response to the Israel-Gaza conflict continue to dent sales.

Alistair Macrow, McDonald’s UK and Ireland boss, said the plans show its "ongoing commitment" to growth and job creation in the two countries.

Over 24,000 jobs would be created by the expansion, McDonald's said.

The company also said there would be a "renewed focus" on High Street restaurants.

Retail real estate expert Jonathan DeMello told the BBC rent on High Street units has "come down significantly post-Covid" due to a swathe of restaurants going bust.

"A huge amount of restaurant space has come back to the market," he said.

He also predicted McDonald's would target retail parks outside of London and other towns and cities in south-east England, although he said demand has driven up rents in those locations.

As well as taking advantage of cheaper rents, Mr DeMello said McDonald's might also be responding to falling interest rates and a recovering economy.

"We've had a cost-of-living crisis... But people are eating fast food," he said.

According to data from Meaningful Vision, which tracks the sector, fast-food promotions have surged by a third on last year.

Experts say McDonald's and its competitors are trying to tempt thrifty customers with cheap offers - a move criticised by health experts.

Danni Hewson, AJ Bell's head of financial analysis, said "getting customers back through the doors" is a big priority for the chain.

"Opening new stores at a time when sales are down might seem counterintuitive," she said.

"But if it can get the offer right and be in the right spot when people are taking their lunch breaks, it should be a recipe for growth."

Mr DeMello said it's likely the company's focus on the UK and Ireland in particular is also being driven by the perceived "stability" of those markets at a time when overseas conflict has hit sales.

The company pulled out of Russia after its invasion of Ukraine, while boycotts in the Middle East and other countries over its perceived support of Israel's campaign in Gaza have also impacted sales.

It is also still dealing with the fallout of a BBC investigation of more than 100 allegations from current and recent McDonald's staff over a culture of sexual abuse and harassment, with young female staff in particular complaining about routine groping.

McDonald's said at the time it had launched a probe into the claims and was "determined" to root out behaviour that falls below the high standards it expects of staff.