McDonald's plans $2 billion in capital spending, and billion in shareholder returns

McDonald's Corp.'s global growth plans this year call for $2 billion in capital spending, most of which will go overseas as it shaves U.S. investment.

The fast food giant also told an investor conference Wednesday it intends to return between $15 billion to $17 billion to shareholders by the end of next year.

About half the company's capital expenditures in 2008 will support the opening of 1,000 or so new restaurants, with the rest financing reimaging at 1,600 locations, recently named Chief Financial Officer Pete Bensen told a Cowen & Co. conference in New York, which was Webcast. McDonald's added 800 restaurants worldwide last year.

Expansion plans call for at least 125 new units in China, where the company competes with Yum Brands Inc.'s KFC and other fast food brands. Between 35 to 40 restaurants will be opened in Russia, Bensen said.

This year's capital spending budget is up from last year's $1.9 billion. While $800 million of the $2 billion will be earmarked for Europe, compared with $675 million last year, U.S. spending will decline slightly to about $770 million from $775 million in 2007, the company said.

McDonald's "Plan to Win" for the U.S. is focused on four strategies - chicken, breakfast, beverages and convenience. As part of that multi-pronged effort, McDonald's will roll out a Southern-style chicken biscuit breakfast sandwich across the U.S. this spring, Bensen said.

The beverage strategy, which the company has been lobbying its franchisees to embrace, would add an array of items, among them lattes, espresso and other specialty coffee drinks; iced tea; energy drinks; and, eventually, smoothies as it seeks to tap into what it sees as a huge sales opportunity.

McDonald's projects that a full array of beverages could add as much as $125,000 a year in sales per restaurant.

"We need to balance speed to market ... with a great experience," Bensen said of that venture.

Adding beverages could cost as much as $125,000 a restaurant, with the company picking up about 40 percent of the tab, the CFO said. Franchisees would have to pay the $25,000 bill for new equipment.

McDonald's convenience push calls for opening more of its U.S. restaurants as early as 5 a.m.

Source: chicagotribune.com

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