‘Perfect storm’ for retailers, warns McDonald’s boss

The boss of the fast food chain says it is vital that UK firms continue to innovate and “disrupt” their own markets to survive.

Britain’s retailers are facing “a perfect storm” that will see businesses squeezed and more corporate failures, according to the UK boss of McDonald’s.

In an exclusive interview for Sky News, Paul Pomroy said he had made the “bold decision” to keep investing in restaurants and staff since Brexit, but said conditions were getting ever tougher.

Describing a “perfect storm of challenges, Mr Pomroy said: “I am really concerned by the amount of inflation that companies are carrying at the moment.

“Food inflation is running at between 4% and 7% across retail, there’s pressure on wage inflation, interest rate movements and now you are seeing businesses becoming less brave in their decision-making.

“They’re not making the investment decisions they would normally make and that will affect their business.

“You’re seeing that up and down the country – businesses who are failing, and others who are becoming really tight and squeezed.”

Mr Pomroy said one of the most important challenges for British businesses was to keep innovating at a time of economic nervousness, but he believes companies that stand still run the risk of being overtaken by new, dynamic rivals.

“You will be able to spot those brands that have listened to their customers and disrupted their own markets,” he said.

“For retailers, to be successful, you have got to keep changing and look to disrupt the market yourselves before you are disrupted.

“Other people will undercut you, or disrupt the market that you’re in. So it’s going to be a tough three or four months, and unfortunately there will be closures. We need to make sure we’re doing the right things, and be bold in our decision making.”

Mr Pomroy has overseen a transformation of restaurant design at McDonald’s, with red and yellow plastic furniture replaced by stripped wood, touchscreen tablets and table service.

He has introduced a ‘gourmet burger‘ range in an effort to widen the brand’s appeal and has also started a delivery service.

He also took the decision to offer staff a choice between remaining on a zero-hours contract or switching to full-time jobs (the vast majority have remained on zero-hour deals).

Mr Pomroy has also had to deal with a small but high-profile strike that he maintains was to do with a very specific disciplinary issue rather than a reflection of wider working practices.

But at its heart, his job is about keeping a lot of customers happy.

“We serve 3.8 million customers a day, and 90% of the population come to us at least once a year,” said Mr Pomroy.

“We work on lots of scenarios and, at the moment, there’s a lot of change on the way. And businesses can only handle so much change.”