McDonald's pulls out of top spots

By Mira Bar-Hillel, Property Correspondent, Evening Standard
15 November 2002

For years they have planned global domination, appearing on street corners all over the world.

Now - after being unable to escape them - visitors to central London will find a strange lack of McDonald's after the chain's decision to pull out of many prime locations.

The golden arches of the fast food giant will disappear from 341 Oxford Street, 74 Regent Street, 57 Haymarket, Tower Hill Vaults and Whiteleys shopping centre. McDonald's most controversial branch, on Hampstead High Street, will also disappear - to the delight of campaigners who resisted it for 13 years.

The reason: a downturn in demand that has affected its billion-dollar profits and caused closures in other countries. Last week, McDonald's announced it was closing all its operations in three unspecified Latin American and Middle Eastern countries. It also revealed that 175 "underperforming outlets" in a further 10 countries will shut.

In London, property consultants Dalgleish and Conway Relf have been appointed to value the leases on the McDonald's sites, which may be relet to other businesses or surrendered.

The sites under review are in expensive areas. A cluster of McDonald's sprang up as part of the chain's aggressive expansion programme. At its peak in 1999, it opened 100 outlets in the UK. But this growth slowed down, with 80 openings in 2000 and 60 in 2001.

McDonald's UK head of asset management, Chris Robson, said: "We periodically request valuation guidance from consultants and this is part of our ongoing review of occupational costs."

Mr Robson added that the aim was "maximising sales in certain locations" but he stressed there were no plans for mass closures in central London. "We will have more restaurants trading in London at the end of 2003," he said. "They will, however, be in suburban rather than West End locations."

But Giles Barrie, executive editor of Property Week, which publishes the full story today, said: "McDonald's is clearly feeling under pressure. To offload f lagship restaurants like Haymarket and Oxford Street appears an admission that its unstoppable march across London has come to an end.

"These locations have been landmarks and meeting places for thousands of tourists, young people and families for up to two decades now. This could be the end of an era - but you can never write McDonald's off."

Hampstead MP Glenda Jackson, who campaigned to keep McDonald's out of the area in the Eighties, has had a change of heart. "I believe people here will be sorry to see them go," she said. "The campaign was a long time ago ... since then McDonald's have proved to be good neighbours and useful employers, as well as selling affordable meals."

McDonald's has around 1,200 branches in the UK and 30,000 worldwide. Its hardest-hit markets are in the Middle East, where there have been boycotts in protest against American policies in the region. The company expects to cut 400 to 600 jobs.