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McDonald’s CEO: Company Is ’Nowhere Near’ Saturation

Nov. 21 (Bloomberg) -- McDonald’s Corp., the largest restaurant chain in the world by sales, isn’t close to having too many locations globally, Chief Executive Officer Don Thompson said.

“I don’t see in my lifetime when there would be a time of saturation with McDonald’s,” Thompson, 50, said during an interview at The Year Ahead: 2014, a two-day conference in Chicago sponsored by Bloomberg LP, the parent company of Bloomberg News and Bloomberg Businessweek. The Big Mac seller is “nowhere near saturation,” he said.

There’s room for new stores in some of McDonald’s biggest markets, including the U.S. and France, he said. The company is planning to open 1,500 new locations worldwide this year and as many as 1,600 in 2014.

Thompson, who took over as CEO last year, has struggled to attract American diners amid falling consumer confidence and fierce competition from rivals introducing new fare. This year, the restaurant chain introduced too many items too quickly, bogging down the kitchen and slowing store service, Jeff Stratton, McDonald’s USA president, said during an investor conference last week.

McDonald’s has a 19 percent share of the $191 billion in U.S. fast-food restaurant sales, according to researcher IBISWorld Inc. The Oak Brook, Illinois-based company has reported four straight quarters of U.S. same-store sales that have increased 1 percent or less.

‘Very Soft’

The U.S. fast-food industry is “very soft” now, Thompson said today.

McDonald’s is trying a number of tactics to attract customers such as selling pumpkin-spice lattes and testing a mobile payment application in some locations. It’s also adding a third window to its drive thrus to speed up service.

The shares rose 0.2 percent to $97.70 at the close in New York. They have advanced 11 percent this year, trailing the 25 percent gain for the Standard & Poor’s 500 Restaurants Index.

McDonald’s has about 34,900 locations, of which 81 percent are owned and operated by franchisees.

To contact the reporters on this story: Leslie Patton in Chicago at lpatton5@bloomberg.net; Betty Liu in New York at bliu17@bloomberg.net

To contact the editor responsible for this story: Robin Ajello at rajello@bloomberg.net

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