Business Irish

Tuesday 26 September 2017

Not all investors are lovin' it under 'golden arches'

John Mulligan

John Mulligan

FOR some people, a job at McDonald's is just a stepping stone to a career elswhere.

For others, owning their own McDonald's outlet is perceived as the ultimate money-spinner, but how have the 27 McDonald's franchisees in Ireland been faring in a tough economic climate?

The Irish Independent has trawled through stacks of data filed at the Companies Office to get a taste of what's really cooking in the fast food kitchens. Most are thriving, but others are feeling the pinch.

Last month, Domino's Pizza said its sales in Ireland have slumped 31pc between 2007 and 2012 as the downturn took hold.

Another operator of a well-known fast-food chain told the Irish Independent recently that he reckons sales declines of between 30pc and 50pc have been the norm over the past few years at fast-food businesses here.

But with the muscle of the McDonald's brand behind them, most franchised outlets appear to be holding their ground.

Some have faltered, while others are shrugging off the downturn, the exhaustive survey reveals.

Dividend

In Limerick, former Ireland rugby captain Philip Danaher has been doing well. His Kellysdan vehicle owns four McDonald's restaurants in the city. In 2010 they made a €510,540 operating profit, up from €327,000 in 2009. But turnover slipped to €8.3m in 2010 from €8.5m in 2009.

Artcast, the company behind Dublin outlets in Artane and Santry, saw its operating profits rise to €585,000 in 2011 from €527,442 in 2010. Owned by Ian Carroll, the company added a third franchise, in Ballymun, in 2011. The firm also paid a €3.5m dividend to its owners in 2010.

The owner of an outlet in Drogheda, Michael Ruding, saw his company make a €373,221 operating profit in 2011, down from €413,101 in 2010.

Some of the accounts available for the franchisees' firms are far more detailed than others, while in some cases falls in profitability can also be attributed to hikes in director pay.

Take the owner of outlets at Drinagh, on the outskirts of Wexford town, and in Carlow. Bernard Byrne's company, Brydan, reported a €73,848 operating profit in 2011, down from €124,222 in 2010. But director pay at the company jumped to €297,649 in 2011 from €190,756 a year earlier.

Likewise for Aarval, the firm behind outlets at Shop Street in Galway and Westside Shopping Centre in the city. Owned by Aaron Byrne, Aarval saw operating profit fall to €5,408 in 2011 from €409,031 in 2010. But director remuneration jumped to €402,716 from €99,012.

Immune

It can work the other way too. Seador Restaurants, the company behind outlets at Athlone and Mullingar, saw its director remuneration fall to €301,659 in 2011 from €437,105 in 2010.

The company is controlled by Sean Corcoran. Operating profit at the firm rose to €106,704 in 2011 from €15,491 in 2010.

But others appear to be simply taking a hit. Calgary Trading Company, the firm behind two McDonald's restaurants in Waterford city, has seen turnover fall to €5.4m in 2011 from €5.3m in 2010 and director pay was steady at about €95,000. But operating profits slumped to €263,791 from €485,305.

And Dublin isn't immune from difficulties. Happy Family Foods, the company behind an outlet in Blanchardstown, hasn't had much to smile about.

Owned by Declan O'Driscoll, the company made a €78,591 loss in 2011 and a €24,761 loss in 2010. The latest set of accounts, for 2011, note that in June 2008 the firm acquired all the shares in a subsidiary.

"Due to adverse trading conditions, full provision was made in 2008 to write off its investment," the accounts state. "A provision of €200,000 was made in the 2010 accounts against recovery of a loan to the subsidiary and a further provision of €406,000 is made in these accounts."

The vast majority of the Irish franchisees are men, with only three women branch owners. One of them, Brenda O'Loughlin, is a former Citibank employee. She describes being a franchisee as her "dream job".

She has two outlets, in Portlaoise and Tullamore. In 2011, they made a combined operating profit of €161,434, down from €233,075 in 2010. Director pay rose though, to €174,070 in 2011 from €153,596 in 2010.

Meanwhile, in Kerry, Kingdom Restaurants – owned by Martin Hoban – saw operating profits fall to €138,011 in 2011 from €410,028 in 2010. Director remuneration rose to €1.05m from €876,000, however.

Irish Independent

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