McDonald’s mulls IPO

Golden Arches Development Corp. (GADC), the Philippine franchise holder of US fastfood giant McDonald’s, is open to listing its shares at the Philippine Stock Exchange (PSE) through a possible initial public offering (IPO) once local market conditions stabilize.

GADC president George Yang said the company is considering the possibility of going public although no formal studies have been made yet. "For a long-term objective, I think it’s possible for the company to list. Maybe we can do it in the next five years and that will be very good for the country," he said.

Yang said he is optimistic on the growth of the domestic economy and expects modest growth in the fastfood industry as the political situation stabilizes.

If it decides to list, GADC will only be the third fastfood chain to list at the local bourse next to main rival Jollibee Foods Corp. and Pancake House.

This year, Yang said GADC has earmarked as much as P1 billion for its capital spending program to put up new stores and refurbish existing ones in order to remain competitive in the industry.

The company plans to open 15 to 20 new stores this year to maintain the double-digit growth in its sales as half of the new stores to be opened would be franchised.

GADC, a joint venture between Delaware-based McDonald’s Corp. and Yang’s McGeorge Foods Industries Inc., leases and manages the properties that house the McDonald’s chain in the Philippines.

Yang said funding for the group’s expansion will come from internally-generated cash. McDonald’s now operates 240 restaurants in the Philippines compared with Jollibee’s 988 stores.

But he said the company’s performance in the first half this year has been very strong, bolstered by increase in food purchases during political campaigns.

Yang added that the company also sees the need to close down unprofitable stores to cut on costs and enhance operating efficiency.

GADC, however, is going full blast this year with the expansion of McCafe, its coffeeshop retail business. It opened five McCafe stores last year, costing between P3 million to P5 million each.

There are 305 McCafe stores worldwide, including Australia, Hong Kong, Japan, Taipei and United States. It serves cinnamon, brownies, cheesecake, blackforest and other similar pastries readily available with coffee favorites such as cappuccino, latte, mocha or espresso.