McDonald's Australian profits are expected to plunge 20 per cent due to the coronavirus pandemic and more health-conscious consumers
- Profits at McDonald's have plummeted before the coronavirus pandemic struck
- Its profits fell six per cent in 2019 and are expected to fall 20 per cent this year
- Revenue weakened to $1.678billion in 2019, before the coronavirus struck
- Australians are becoming more health conscious according to new research
- Here’s how to help people impacted by Covid-19
McDonald's profits have dropped and are expected to plunge a further 20 per cent as a result of the coronavirus pandemic and Australians becoming more health conscious.
Profits from the company's Australian restaurants fell six per cent in 2019 and are expected to fall a further 20 per cent this year as a result of the COVID-19 pandemic.
Revenue weakened to $1.678billion in 2019, down from earnings of $1.7billion in 2018.
There has been a steady decline in fast food revenue since 2014 as consumers are becoming more health conscious.
McDonald's profits have dropped and are expected to plunge a further 20 per cent as a result of the coronavirus pandemic and Australians being more health conscious. Pictured: A Melbourne McDonald's closed on May 18
Profits at the Australian fast-food chain fell six per cent in 2019 and are expected to fall a further 20 per cent this year as a result of the COVID-19 pandemic
In the company's 2019 financial report McDonald's Australia chief executive Andrew Gregory said the lack of dine-in was 'partially offset by a strong uplift in drive-through and delivery sales', The Australian reported,
The fast-food giant also uses Uber and Deliveroo to complete delivery orders, with both companies taking commissions of up to 30 per cent.
As a result of the virus's impact on sales, McDonald's Australia warned in its 2019 financial report it may need to review values of intangible assets.
The report said business had been 'directly impacted' by trading and personal distance restrictions.
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Some stores had even been forced to close despite customers turning to drive-through sales and delivery orders.
'To date, impacts include reduced customer traffic and the closure of some retail and airport sites for a period of up to three months,' the report read.
'A subsequent downturn in sales resulting from the government- mandated closure of dine-in services for all restaurants and cafes, has been partially offset by a strong uplift in drive-through and delivery sales.'
Despite restrictions being eased slightly sales are still continuing to drop.
McDonald's Australia chief executive Andrew Gregory (pictured) said the downturn in sales had been from the government-mandated closure of dine-in due to social distancing laws
Growing consumer awareness of the importance of healthy eating has transformed the industry in the last five years according to an IBISWorld report on the fast food industry.
'Australians have become increasingly health conscious due to public campaigns discouraging unhealthy lifestyles,' the report said.
'Consumer health awareness has transformed the Fast Food and Takeaway Food Services industry over the past five years.'
People now have an increased awareness of fast food's nutritional content with consumers making choices to be healthier which is affecting industry demand.
'Increased awareness of fast food's nutritional content and a conscious effort by consumers to choose healthier options have affected industry demand,' the report says.
As a result of the virus's impact on sales, McDonald's Australia warned in its 2019 financial report it may need to review values of intangible assets
'Industry operators have responded by introducing a range of healthier, premium choices with less fat, sugar and salt.'
McDonald's represents more than one-fifth of Australia's fast-food industry with sales expected to drop up to 20 per cent by the end of 2020 because of coronavirus.
The pandemic is driving a significant decline in industry revenue in the current year after bans were put on dine-in due to social distancing laws.
'Additionally, rising unemployment and fears regarding a significant economic downturn, have discouraged Australian consumers from making discretionary purchases,' the report says.
'These trends have contributed to a decline in demand for industry products, and a consequent decline in industry revenue.'
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