Fast-food giant McDonald's Corp. (Oak Brook, Ill.) is believed to be exploring the idea of selling non-food items in its restaurants to drive up sales beyond its mainstay hamburgers, fries and soft drinks, Crain's Chicago Business has reported.
As part of its long-term growth strategy, notes Crain's, McDonald's is ''looking at concepts that might go beyond restaurants, which could involve retail extension,''according to company spokesman Walt Riker.
McDonald's posted its sixth straight quarterly earnings decline in April, and is trying to reverse two years of disappointing results resulting from slowing domestic sales, concerns over mad cow disease and weak economies overseas.
Any venture into retailing would not materialize for at least two years, Riker cautioned. “People should not start jumping to conclusions as to what we're doing. We're going to experiment and see what might work.''
McDonald's would not say what kinds of products it is thinking of selling in its restaurants. “I think it's difficult to come up with products that would add shareholder value,''one analyst told Crain's. “It seems like it would siphon resources from its core business.”
The idea that McDonald's could leverage its considerable real estate assets and sell products and services besides fast food has been under management's consideration for a few years, analysts said. The world's largest restaurant company is also one of the biggest private owners of real estate, with some 13,100 restaurants in the United States. It typically owns the land on which its restaurants are built, which it then leases to franchisees for 20 years.
In Japan, the company signed a deal earlier this month with Internet investor Softbank Corp. to offer high-speed Internet service for a monthly fee in the nearly 4000 McDonald's restaurants there, turning them into potential Internet cafes.