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Why McDonald’s is disappearing from food courts

DOES retail therapy make you crave a Big Mac?

You may find it more difficult to find one at the shopping centre food court, with McDonald's shifting its focus towards airports, railways and highways.

As operators like Westfield ramp up their efforts to turn shopping centres into retail "destinations" with high-end food offerings, traditional fast food is said to be falling out of favour.

"Big shopping centre owners want to get sexier-looking tenants. Maccas and Hungry Jacks are not seen as healthy or bespoke enough," Joshua Bush, leasing executive at Colliers International, told Fairfax Media.

"Food court space is more likely to be casual dining with a local operator like Rolld, Zeus Street Greek or Guzman y Gomez, because they're perceived to offer healthier options."

Geoff Dart of DGC Advisory said centre operators were "always looking at ways to excite customers outside their shopping experience", such as redeveloping their entertainment and dining precincts and overhauling food courts.

The shift is expected to become more noticeable in coming years as retail leases, typically signed for a five-year term, come up for review.

McDonald's and Hungry Jack's shut their doors within weeks of each other at Westfield Marion in Adelaide last year, with the centre's Facebook page announcing they would be replaced with "exciting new casual dining spots".

The shopping centre, the largest in South Australia, is undergoing a $350 million, five-year redevelopment including a new fresh food precinct. Its burger options include Oporto, Grill'd and TGI Fridays.

McDonald's did not reveal why it closed the store, but its approach at similar properties in Sydney and Melbourne has been to create a 'premium' offering focused on barista coffee and the touch screen activated Create Your Taste menu, with laptop-wielding customers sipping lattes and ordering $15 burger meals with topics like brie cheese and smoked bacon.

Walking past the busy outlet at Westfield Bondi Junction, opened in early 2016, one could be forgiven for mistaking it for a local cafe rather than the nation's second-largest fast food chain.

The premium-style McDonald's is located near the centre's busy Bronte Rd entrance, replacing a previous food court outlet.

A similar approach was taken at Melbourne's Chadstone Shopping Centre store, which opened in October last year.

That store has minimal seating for dining in, with its slick corner counter top and touchscreens designed for customers hurrying past on their way out from the nearby Kmart, Target, Rebel Sport and JB Hi-Fi stores.

It it located away from the main food court where rice paper rolls, sushi, sandwiches and juices are the focus, and the fine-dining restaurants of Chadstone's "dining terrace" and alfresco "dining laneway".

McDonald's senior development director Joshua Bannister declined to say whether there would be any further store closures, saying the company was focused on "ensuring we're in the right space for our customers".

"We're constantly revising our portfolio mix," Mr Bannister said, adding that the company was "investing across the board".

"It's about ensuring what's right for McDonald's operations is commercially viable," he said.

"We are working with landlords to innovate and bring the best of the freestanding restaurant into the retail environment."

While shopping centres account for "just over 10 per cent" of McDonald's national footprint of 960 stores, its "bread and butter" is in drive-through and freestanding restaurants located near freeways, train stations and airports.

The fast food giant is investing millions of dollars in a sparkling new, double-storey restaurant at the Sydney Airport's international terminal, set to open by the end of this year.

It recently opened a freestanding restaurant on a busy road in Sydney's Kellyville North, and its soon-to-open store in Brisbane's Queen St is in a prime location to capture foot traffic in the busy pedestrian mall.

Retail analyst Barry Urquhart said McDonald's was acting to pre-empt big changes coming to the way shopping centres operate.

"There is no question that what shopping centres are trying to do is change the profile of their business with an emphasis on the shopping experience," Mr Urquhart said.

Centres across the country were undergoing multi-billion dollar upgrades and aimed to lure shoppers with high-end al fresco dining options.

McDonald's, he said, had responded by focusing on its strong point: convenience.

"For fast food brands, it is getting increasingly harder to establish yourself as destination outlet where people will travel to you," Mr Urquhart said. "They are re-emphasising the fact that it's a convenience food, meaning accessibility."

"Fast food operators are now 24/7; they want a traffic flow where people are going to be coming past them instinctively at all times of the day and night," he said.

Peak trading time at shopping centre food courts was restricted to the afternoon and evening, he said, with Saturday the busiest day thanks to family visits - and parents often opted for "healthier" options.

Mr Bannister said McDonald's planned to take advantage of national infrastructure spending to build new restaurants "where our customers are".

"The business is in a period of sustained growth, which provides a great opportunity for future store openings," he said, adding that its new approach to shopping centre outlets was "market leading".

- With Frank Chung.

Topics:  editors picks mcdonalds

News Corp Australia


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