McDonald’s Irish profits up 70%

PRE-TAX profits at McDonald’s Restaurants of Ireland jumped by 70% last year to €9.2 million, accounts filed with the Companies Registration Office reveal.

This is in sharp contrast to McDonald’s UK where pre-tax profits from its 770 company-owned outlets fell by 71% to €23.6m in 2003.

McDonald’s in Ireland appears to be bucking the international trend which has forced McDonald’s worldwide to revitalise its menus with healthy eating options and its latest ‘change’ marketing campaign. The poor performance in Britain was the worst in the British arm’s 30-year history but does not include the 470 franchise operations in Britain.

McDonald’s Restaurants of Ireland run just 18 of the 68 McDonald’s in Ireland, the remaining 50 are run by 30 individual franchise holders who file individual accounts.

The massive growth in profits in the year to December 31, 2003 was built on the back of a modest 3.8% growth in turnover to €71.3m.

Profits were also boosted by a cut in staff costs from €16m to €15m.

The company employed 1,090 people in 2002 and 1,125 in 2003. Despite having more employees, pension costs dropped from €295,000 in 2002 to €265,000 in 2003.

In the accounts the company said that all of the turnover related to sales in the Irish market and represented sales in company operated restaurants, as well as revenue generated from franchising, excluding value added tax.

The company’s interest bill of €1.4 million was down on the €1.5 million of 2002.

The accounts show that the company’s overdraft rocketed to €29.7m in 2003, from €2.3m in 2002 but the company also cleared a €29m loan from its parent undertaking, whose ultimate holding company is the McDonald’s Corporation in the USA, in 2003. No dividend was paid in 2003.

The company stated in the accounts that it anticipated “continued expansion” of its Irish operations.

The accounts also reveal that company director Marcus Hewson disposed of 1,349 shares in the McDonald’s Corporation in 2003.

During the year, McDonald’s Restaurants of Ireland also transferred the assets of a subsidiary Jessamdale Limited which operates two stores in Tallaght to the parent company. The assets had a book value of €2.5m.

In the accounts, the directors said they were satisfied there had been “no impairment in the carrying value of the investment.”