Maccas turning its back on shopping centres

Property experts say established fast food brands such as McDonald’s are losing favour with shopping centres.Australia’s best-known fast food chain McDonald’s is believed to be shunning shopping centres in favour of airports, railways and highways.

McDonald’s is Australia’s second-biggest fast food chain by store numbers, and is opening between 25 and 35 restaurants a year.Of its 960 stores, just over 10 per cent are in retail precincts.

Property experts say established fast food brands such as McDonald’s are losing favour with shopping centres whichare keen to increase thenumber of food outlets in their malls from 10 per cent of stores to more than 30 per cent.

McDonald’s introduced newfitouts recently at its stores inWestfield’s Bondi Junction and Vicinity’s Chadstone mall in Melbourne, partly at the behest of landlords who want a more upmarket offering.

But industry insiders say McDonalds is pulling away from opening more stores infood courts, particularly at Westfield shopping centres.

Joshua Bannister, senior development director McDonald’s, told Fairfax Media the chain was primarily focused on restaurants with drive-thrus and stores around highways, railways and airports.

Mr Bannister would not be drawn on whether McDonald’swas winding back its presence in malls as some industry insiders maintain.

Food courts are turning away from fast food giants as they look to attract healthier offerings. Photo: iStock

Fairfax Media has been told McDonald’s has a $3 billion property portfolio in Australia and prefers to own rather than rent.

Industry insiders suggest McDonald’s,like many chains, is concerned by the stampede of food offerings into shopping centres.

The argument is there is littleincentiveto spend hundreds of thousands of dollars installing a kitchen in a shopping centre when the chainwould not enjoyexclusivity tocustomers.

“When it comes to food courts, what we find ourselves doing is partnering with the major landlords to understand what their design intent is.”MrBannister said.

“That partnership with major landlords is critically important in ensuring that we’re delivering something that is modern and relevant to customers. It’s an area where we challenge the retailers, we challenge the landlords.”

“As a McDonald’s Australia business we’ve got a seat at the table in terms of design issues.”

Mr Bannister added, “Of course, like any other business, we would want to do a review of our portfolio, we would want to understand commercially what is right for us.”

‘Sexier’ tenants soughtMcDonald’s is the best-known quick service restaurant in Australia, according to Emma audience data. It is also the second biggest fast food chain by stores, behind Subway, and has the biggest drive-thru network, said market research company NPD.

Drive-thru is the third most popular way for Australians to buy fast food. The most popular way is instore, followed by takeaway, drive-thru, at the food court and delivery/pick up, NPD said.

Joshua Bush, leasing executive at Colliers International, said most of McDonald’s revenue was from “drive-thrucustomers.”

“Big shopping centre owners want to get sexier-looking tenants. Maccas and Hungry Jacks are not seen as healthy or bespoke enough,” he said.

Food court space is more likely to be casual dining with a local operator like Rolld, Zeus Street Greek or Guzman y Gomez because they’re perceived to offer healthier options, he said.

Burgers account for 24 per cent of Australia’s $28.7 billionquick service restaurant market, according to NPD Group, and just over two-thirds of QSR sales come from chains.

“We are opening 25 to 35 restaurants a year. We are in a period of sustained growth,”Mr Bannister said.

“The other area where we are achieving growth and having great success is transport and infrastructure which is going through a period of sustained investment and development from government,” he said.

Scentre Group, which owns Westfield shopping in Australia, was contacted for comment.