Independent on Sunday 10 November 2002 01:23 BDT

Stores shut and shares tumble as reality bites at McDonald's
[contains quote by Dave Morris in last paragraph]

By Andrew Johnson, Leo Lewis and Paul Kelbie


McDonald's has announced it is to shut 175 stores in 10 countries and will pull out of three
countries altogether – reversing its 20-year policy of global expansion. Six hundred jobs are
also to go.Friday's announcement from the corporation's world HQ in Chicago followed a
disastrous year in which a plunging share price knocked a third off the corporation's value.
Shares worth £31 each two years ago are now worth only £10 and the company's value has
fallen from £21bn to £14bn.

McDonald's has so far refused to name the 10 countries where restaurants will close, but says
the countries it is pulling out of are in Latin America and the Middle East. Financial experts say
in Europe health fears over mad cow disease, and the rise in obesity in children, may have
contributed to poor sales. High street competition from healthier alternatives is also to blame. In
the Middle East and Latin America antipathy towards the United States may be keeping people
away.In America itself a price war with McDonald's arch-rival, Burger King, triggered by falling
hamburger sales, has knocked profits as well as creating financial problems for Burger King.

McDonald's has long been in the sights of anti-globalisation protesters. On Thursday a partially
built-store in Grenoble, France, was burned down. But with 30,000 restaurants in 121 countries,
400,000 employees and a £21bn turnover this year, McDonald's is still a global player, financial
experts say. On Friday McDonald's chief executive, Jack Greenberg, said he was still looking to
boost sales. "We remain focused on growing our existing restaurants' sales and are committed
to making the changes necessary to succeed," he said.The question, experts say, is whether
the company that revolutionised eating and business habits across the world is really on its way
out or is just experiencing a temporary blip."The billion dollar question is whether this is the
beginning of the end or merely an adjustment to over-expansion," one Wall Street analyst said.

At McDonald's in Dumbarton outside Glasgow yesterday the lunchtime's "rush" filled less than
half of the restaurant. In a country with a preference for a fast-food diet, the golden arches seem
less attractive than they used to."I come here a couple of times a week with the kids but feel
guilty about it every time," said Tracy Watson, 34, from Dumbarton."It's easy and convenient but
not exactly nutritious. If it wasn't for the children I wouldn't come here at all – the food isn't that
good, it's usually cold and fairly bland.""They have good toys with the happy meal, that's the best
bit," interrupted her son Matthew, aged 7.

For electrician Bill Duncan, 48, and his wife Ann, from nearby Balloch, the restaurant provides a
convenient coffee break from the weekly shopping chores."I can see why they're closing
branches; we don't come here very often, just for a coffee and maybe an apple pie on the odd
Saturday. It's a quick treat but I certainly wouldn't consider it for a proper meal."I remember
when McDonald's first arrived in Scotland they were all the rage but ... it's no longer special."

Not everyone is unhappy with McDonald's woes. Dave Morris, one of the "McLibel Two" who
was sued by McDonald's in 1997 for claims made against the company in a leaflet, said it has
"been under attack from all sides"."Its workers are organising internationally, local residents are
increasingly campaigning against new stores and it is being blamed for causing obesity," he
said."McDonald's is a barometer of the food industry as a whole and capitalism in general. I
think the fact there has been a global campaign against McDonald's for the last 20 years has
helped people question their activities and look for alternatives."

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