McDonald's feels petrol pain
Herald Sun: McDonald's feels petrol pain [17sep05]
Bruce Brammall
17sep05
SKY-HIGH petrol prices are finally causing real pain for consumers according to McDonald's Australia, which yesterday warned of slumping sales growth.
The Australian arm of the US burger giant admitted 4 to 5 percentage points had been knocked off sales growth in just the past three or four weeks.
McDonald's Australia chief executive Peter Bush said the double whammy of increased mortgage interest rates in March-April and sharply higher fuel prices had come home to roost in the past month.
Mr Bush said many families were struggling to find the extra $30, $40 or more needed for fuel each week and had been forced to cut family budgets.
The 0.25 percentage point rate rise by the Reserve Bank in March had been a compounding factor.
He also said that he doubted McDonald's was alone in feeling the pinch.
"It is something we are all going to have to live through for some time," Mr Bush said yesterday.
"The higher fuel prices go, the more every damn industry has to be affected."
Mr Bush said McDonald's Australia, which has about 730 fast-food outlets in Australia, was still increasing sales on a year ago but he declined to give figures.
It is believed growth has been knocked from high single figures to a few per cent at best.
His warning was the bluntest yet of any Australian retail outlet on the effects of rising petrol prices.
Most economic statistics released in recent weeks do not capture the period Mr Bush referred to.
However, Westpac's consumer sentiment survey, released on Wednesday, showed the eighth largest fall in confidence since the survey began in 1974 with a fall of 13.3 percentage points.
The report said the average household was spending an extra $10 a week on fuel, the equivalent effect of a 0.25 percentage point interest rate rise.
A number of large listed Australian retailers have reported annual sales and profit figures in recent weeks.
But most had June 30 ends to their financial years and, if they commented on sales in their new financial year, had not covered the period Mr Bush referred to yesterday.
Jeans retailer Just Group's managing director Howard McDonald seemed unsure of continued consumer confidence when he reported his profit this week.
Asked if there had been any specific impact of rising fuel prices on Just, he said: "None, we're OK. But I think we are still in that unsettled period (where the fuel price has not stabilised)."
However, he said there was anecdotal evidence that consumer behaviour had changed significantly.
Mr McDonald said shoppers, in order to save on petrol costs, were preferring to drive to shopping malls where they could get everything instead of driving to three or four different shopping strips.
Petrol prices have risen to above $1.30 a litre in recent weeks as oil prices briefly surged above $US70 in the wake of damage to oil platforms in the Gulf of Mexico from Hurricane Katrina.
The oil prices has since softened to about $US64.50 a barrel but most analysts expect the price to remain volatile.
Bruce Brammall
17sep05
SKY-HIGH petrol prices are finally causing real pain for consumers according to McDonald's Australia, which yesterday warned of slumping sales growth.
The Australian arm of the US burger giant admitted 4 to 5 percentage points had been knocked off sales growth in just the past three or four weeks.
McDonald's Australia chief executive Peter Bush said the double whammy of increased mortgage interest rates in March-April and sharply higher fuel prices had come home to roost in the past month.
Mr Bush said many families were struggling to find the extra $30, $40 or more needed for fuel each week and had been forced to cut family budgets.
The 0.25 percentage point rate rise by the Reserve Bank in March had been a compounding factor.
He also said that he doubted McDonald's was alone in feeling the pinch.
"It is something we are all going to have to live through for some time," Mr Bush said yesterday.
"The higher fuel prices go, the more every damn industry has to be affected."
Mr Bush said McDonald's Australia, which has about 730 fast-food outlets in Australia, was still increasing sales on a year ago but he declined to give figures.
It is believed growth has been knocked from high single figures to a few per cent at best.
His warning was the bluntest yet of any Australian retail outlet on the effects of rising petrol prices.
Most economic statistics released in recent weeks do not capture the period Mr Bush referred to.
However, Westpac's consumer sentiment survey, released on Wednesday, showed the eighth largest fall in confidence since the survey began in 1974 with a fall of 13.3 percentage points.
The report said the average household was spending an extra $10 a week on fuel, the equivalent effect of a 0.25 percentage point interest rate rise.
A number of large listed Australian retailers have reported annual sales and profit figures in recent weeks.
But most had June 30 ends to their financial years and, if they commented on sales in their new financial year, had not covered the period Mr Bush referred to yesterday.
Jeans retailer Just Group's managing director Howard McDonald seemed unsure of continued consumer confidence when he reported his profit this week.
Asked if there had been any specific impact of rising fuel prices on Just, he said: "None, we're OK. But I think we are still in that unsettled period (where the fuel price has not stabilised)."
However, he said there was anecdotal evidence that consumer behaviour had changed significantly.
Mr McDonald said shoppers, in order to save on petrol costs, were preferring to drive to shopping malls where they could get everything instead of driving to three or four different shopping strips.
Petrol prices have risen to above $1.30 a litre in recent weeks as oil prices briefly surged above $US70 in the wake of damage to oil platforms in the Gulf of Mexico from Hurricane Katrina.
The oil prices has since softened to about $US64.50 a barrel but most analysts expect the price to remain volatile.
posted by Marcel at 2:45 PM
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