McDonald’s licencee Premier Capital posts €19 million pre-tax profit in 2020

McDelivery, McDrive underpin operational resilience throughout pandemic

Premier Capital plc, the Maltese-owned Developmental Licencee for McDonald’s in six European markets, has posted a pre-tax profit of €19 million for the year ended December 31, 2020, down from €28 million in 2019, in a year that saw McDelivery and McDrive underpin the business’ operational resilience.

As challenging trading conditions across the continent impacted operations and, consequently, profitability, the group’s operating companies successfully navigated constantly changing restrictions imposed by national authorities to remain close to their communities. Restaurants continued to serve customers mainly through McDrive and McDelivery, and lobby take-out as dine-in service was suspended across most of the group’s footprint. Customer demand for McDonald’s products maintained high levels as evidenced by long lines at McDrive lanes and soaring McDelivery sales were recorded throughout the year under review in all markets.

In 2020, the group reviewed its capital commitments and instructed its teams to preserve liquidity in view of the pandemic. However, in order to maintain focus on its long-term vision, the group pursued its investment strategy with five restaurant openings and secured 100 per cent ownership of the Romanian business after acquiring the 10 per cent stake held by a single shareholder.

Last year, the group registered a 6.5% decrease in turnover to realise revenue of €319 million, thanks  to its team of 8,726 people in 159 restaurants in Estonia, Greece, Latvia, Lithuania, Malta and Romania. There were no Covid19-related job losses – headcount fell by just 24 people from the beginning of 2020 – as the group endeavoured to preserve its staff complement by tapping wage support programmes put in place by national authorities.

All markets experienced business disruption, with Malta reporting the highest impact with an overall decrease of 15.7% compared to 2019. The other five markets registered single digit declines in sales: Romania and Greece of 8%, Lithuania 3.3%, Estonia 2.2%, and Latvia 1%. Premier Capital opened five new restaurants last year: three in Romania, one in Lithuania, and one in Greece. A further 14 existing restaurants were upgraded to accommodate McDonald’s newest service and digital platforms allowing for the roll out of table service and self-ordering kiosks. By the end of 2020, a total of 145 restaurants had deployed McDelivery. Two restaurants in Greece were closed.

Although the outlook for 2021 is affected by the fallout from the COVID-19 pandemic, the severity of the impact is expected to be lower than that of 2020. Stringent cost containment measures and budgetary reviews remain in place. In the last few months, some markets have registered significant progress in their vaccination programmes and it is expected that fiscal incentives will kickstart economic activity. Scaled-back operations complying with measures implemented by local health authorities over the past few months should return to normal soon, particularly in Greece and Malta where governments are determined to restart tourism within weeks.

A total of eight new McDonald’s restaurants are planned for opening in 2021, three of which were inaugurated in Romania, Greece and Lithuania by the end of the first quarter of the year.

In January, Premier Capital appointed Geoffrey Camilleri as its new Chief Financial Officer. Mr Camilleri joined the group from Hili Ventures, Premier Capital’s parent company, where he was Chief Financial Officer since 2014.

“As challenging as 2020 turned out to be, it was also a defining year for the group,” Premier Capital Chief Executive Officer Victor Tedesco said. “It demonstrated unequivocally that the business is operationally resilient. Thanks to the McDrive and McDelivery service channels, our restaurants were able to continue to serve our customers and live up to the brand’s legacy as a pioneer of convenience. It was the year Premier Capital gave 100 per cent to protect jobs and keep going wherever possible. It was also the year all our people came together with incredible determination to stay close to our communities when they needed us most, serving our customers at home or on their way to or back from roles and jobs that are so vital to society. Our restaurant crews’ courage, patience and work ethic has been outstanding.

“This year, we continue to monitor the situation in each market closely, but with greater confidence as we now possess the appropriate experience, knowledge and resources for business continuity and contingency planning as we live and work through this crisis. We will keep a watchful eye on the opportunities that have emerged from this situation and ensure we keep our people and customers safe through elevated brand trust. We are emerging from this unprecendented challenge in a strong position. We have preserved our market leadership in five of six of our markets and we can rely on our empowered, passionate people to run great, innovative restaurants. We can’t wait to have all our doors open again so that our crews can welcome our customers back in person.”