McDonald’s UK has experienced a notable drop in pre-tax profits by over £100 million. This financial shift comes despite a notable upswing in revenue figures. The firm’s turnover is on the brink of the £2 billion milestone, indicating robust sales performance. Inflationary pressures on costs have been highlighted as key challenges. The company remains optimistic about future growth and business development.
McDonald’s UK operations experienced a dramatic decline in pre-tax profits in 2023, with figures plummeting to £66.3 million from a robust £170.8 million the previous year. Despite this significant setback in profitability, the company made substantial progress in its overall revenue, edging closer to the £2 billion mark.
According to recent filings, the turnover jumped from £1.59 billion to £1.83 billion. This increase in revenue was driven by an expansion in sales from McDonald’s owned restaurants, which grew from £703 million to £942 million. Meanwhile, income from its licensees saw a slight decrease from £894.3 million to £893.5 million, indicating mixed performance across different segments of the business.
Inflationary pressures have been identified as major contributors to the reduced profitability. These pressures have affected costs related to food, paper, and utilities, adding financial strain to operations. Despite these challenges, McDonald’s maintains a positive outlook on its financial health. A statement from the board emphasised the satisfactory state of the business’s financial position, underlining the company’s confidence in surmounting these hurdles.
A buoyant brand and the success of its drive-thru and delivery services have been pivotal in sustaining growth in total sales through 2024. The firm has witnessed a growth in sales amidst the challenges, buoyed by strategic operations and strong market presence.
In addition, a specific McDonald’s franchise, AG Restaurants, reported a rise in its turnover from £120.1 million to £135.2 million in 2023. Helmed by Andrew Gibson, this franchisee has been significant in the dining sector with multiple establishments and a large workforce. The increased turnover was coupled with a rise in pre-tax profit from £1.8 million to £2.3 million, demonstrating resilience amid the broader industry challenges.
Despite facing considerable profit challenges, McDonald’s UK remains confident in its future business prospects.
