AG Restaurants, overseen by Andrew Gibson, has revealed that ‘bold’ price changes have led to a significant sales increase in the past financial year.
Bold price increases at a prominent McDonald’s franchise empire have resulted in a sales surge exceeding £15 million during its most recent financial year. AG Restaurants, managed by Andrew Gibson, operates 27 locations in Glasgow and employs over 3,000 staff, making it one of the largest franchises in the UK. The company reported a turnover of £135.2 million for 2023, up from £120.1 million in 2022. According to recently filed accounts with Companies House, its pre-tax profit also rose from £1.8 million to £2.3 million during the same period.
The franchise has outlined strategies to mitigate any adverse effects from the price increases through a ‘strong marketing calendar.’ In an official statement, the McDonald’s franchise predicted that ‘2023 economic trends are broadly expected to continue into 2024.’ Consequently, sales growth in 2024 is expected to be largely driven by price increases implemented in 2023.
To address any potential negative impact on guest count due to price rises, the company plans to focus on value at key times of the year as part of its robust marketing calendar. This calendar includes numerous innovative promotional items and new McFlurry flavour variants, which were instrumental in driving incremental sales and visits in 2023. The company emphasised its need for flexibility and adaptability in response to market uncertainties.
Moreover, the company anticipates continued incremental sales growth in 2024 from its application, with an expanding customer base engaged with the Rewards scheme and refined communications to encourage frequent customer visits. The projection includes similar levels and phasing of sales growth in stores and drive-thrus, mirroring those seen in 2024 as the impact of Covid-19 wanes. Sales through McDelivery are expected to remain stable year on year.
The bold pricing strategy in 2023 involved five rounds of price adjustments, utilising a front-loaded approach. In 2024, the strategy group plans to adopt a more balanced pricing approach, with four planned adjustments. The timing, scale, and specific menu items included in these price adjustments will strategically leverage the exciting marketing plan already in place. The group’s agile approach remains essential given the challenging external environment.
The franchise’s forward-looking approach and innovative strategies, including new product offerings and marketing initiatives, are anticipated to continue driving sales growth despite an uncertain economic landscape.