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McDonald's to open eight new restaurants in Malta, Baltics

Premier Capital managing director Melo Hili: "Sixteen of our 30 restaurants have either been inaugurated or remodelled in the past 18 months." Photo: Chris Sant Fournier.

Premier Capital managing director Melo Hili: "Sixteen of our 30 restaurants have either been inaugurated or remodelled in the past 18 months." Photo: Chris Sant Fournier.

McDonald's restaurant operator Premier Capital plans to open eight additional restaurants in Malta and the Baltics over the next two years, managing director Melo Hili told The Times Business.

Marsa-based Premier Capital currently operates 30 McDonald's restaurants serving 60,000 meals a day in Malta, Latvia, Lithuania and Estonia.

The expansion will be partly financed through a planned bond issue. Premier Capital is currently setting up a financing arm, Premier Finance plc, which will issue the bond in a few weeks' time, subject to regulatory approval.

In Malta, McDonalds could venture further in the south of the island and also in the northern area, "depending on opportunities in real estate", Mr Hili explained.

Meanwhile, Premier Capital is examining several options in the Baltic markets.

"We are already present in the major cities," Mr Hili said. "We would also like to expand in other 'substantial' cities. In Lithuania, Kaunas, a city not far from Vilnius, has a popular of 300,000. We are looking at a number of cities like this one, and the possibility of expanding further in capitals."

Mr Hili described the Baltic markets as "well-established" where the competition included major regional names like Finnish burger empire Hesburger and local brands.

In 2005, Premier Capital was named development licensee for McDonald's in Malta. The company immediately set about opening new restaurants while it remodelled the existing outlets at Sliema's Plaza, Malta International Airport, St Julians, Valletta and Bay Street in St Julians.

McDonalds entrusted Premier Capital with three additional markets in 2007 where 19 restaurants were already operating: seven in Estonia and six each in Lithuania and Latvia.

Sixteen of Premier Capital's 30 McDonald's have either been inaugurated or remodelled in the past 18 months.

The company now plans to remodel more of its existing restaurants at a faster pace as it pursues a programme of upgrades that has also seen the unveiling of nine McCafes, the coffee bar brand extension, in some outlets. Locally, there are three McCafes in Malta and one in Gozo.

Premier Capital's McDonald's restaurants are in-store, situated within malls, or configured with drive throughs. The company is particularly keen on identifying more drive-through sites for new restaurants - in the Baltics, 15 of the 19 restaurants are 24-hour drive-throughs. The sole drive-through McDonald's locally, at Malta International Airport, is the best performer within Premier Capital's network.

"The plan would be to focus on drive-throughs in the future," Mr Hili explained. "With a footprint of between 2,500 and 3,000 square metres, we are able to offer more convenience in a drive-through restaurant. Around 500 square metres are occupied by a one-storey building incorporating the restaurant, party area, play area and the McCafe."

The considerable area also allows for extensive parking facilities and is able to accommodate a drive-through facility.

Mr Hili said Premier Capital's continued investment strategy will focus on infrastructure, human resources, products and marketing plans.

"We believe in the brand and in the success of our operation," Mr Hili said. "We have grown the business in terms of turnover from €10 million five years ago to over €50 million last year, driven both by comparative growth and restaurant openings and purchases. We believe now is the time to expand."

The McDonald's brand - a global network of 31,000 restaurants in 119 countries - is performing "extremely well", particularly in European markets like France, Germany and the UK, Mr Hili added. The McDonald's product offered customers very good value, he pointed out, and the brand has been able to ride out the downturn. With 20-year licences in hand, Premier Capital was looking to pursue the planned investments in the short-term to ensure the operation's long-term strength.

The company, he said, has striven to raise the standards to the "upper limit" of the quick service offering, particularly in terms of customer experience with the introduction of additional facilities like credit card payment services, free WiFi and a wider menu for more variety.

Premier Capital operates a fairly flat structure. With a current headcount of 2,400 - its Malta team is around 600-strong - the operation is led by a senior management team of 10. There is a country manager in each of the Baltic markets (the Latvian operation is run by a Maltese manager).

Functional directors are responsible for finance, human resources and training, marketing, development and supply chain which oversees purchasing, logistics and quality.

Mr Hili explained that a wider management team of 250 included store managers, first assistants, restaurant managing teams and office managers.

"Training is constant," the managing director emphasised. "Staff undergoes training in our own dedicated facility in Malta and in restaurants. Several members of the team are also trained in the UK and Germany."

Despite the geographical distance between the individual arms of Premier Capital's operation, the wider team is well coordinated and cohesive. Team building events are held regularly and several initiatives are undertaken to keep staff updated with the latest happenings within the chain. Individual operations' updates have recently been replaced by a network-wide newsletter, available to all staff in four languages.

Ninety per cent of purchasing for the Malta operation is carried out in Italy, France and Austria. Products for the Baltic restaurants are sourced in Poland and Germany. The McCafes in the four markets are supplied by Italian and German producers.

Mr Hili said new, market-relevant products and initiatives are introduced to the four markets concurrently with McDonald's global community. Selected additions are made to each market's menu every quarter.

Mystery shopper programmes developed specifically for McDonald's operations have been applied to the four-country chain. Operations are graded and opportunities for improvement are swiftly identified.

"Our entire operation is focused on the customer," Mr Hili emphasised. "We have four core values: quality, service, cleanliness and value. They are the drivers of the business. Everything we do is centred round those values."

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