FAST FOOD

China to get 2,000 more McDonald’s restaurants in next five years

New plans come after fast food giant sells off most of the China business to Citic and Carlyle, saying they would bring a better understanding of the local market

PUBLISHED : Tuesday, 08 August, 2017, 5:00pm
UPDATED : Tuesday, 08 August, 2017, 10:25pm

Fast-food giant McDonald’s plans to accelerate its expansion in China increasing the number of restaurants in the country by 2,000 by the end of 2022, to a total of 4,500 nationwide.

The chain hopes the mass openings will drive double-digit sales growth in China in each of the next five years said Steve Easterbrook, its president and chief executive.

McDonald's to target growth in smaller Chinese cities after Citic deal closes, says chairman

The new plans come after McDonald’s sold off most of the China business to state-owned investment house Citic and global asset manager Carlyle, saying they would bring a better understanding of the local market.

Under that US$2.08 billion deal, announced earlier this year, McDonald’s still holds a 20 per cent stake in the business. Citic Ltd and Citic Capital Partners will jointly take a 52 per cent stake, while US firm Carlyle will hold 28 per cent.

The opening pace of new McDonald’s restaurants in mainland China is expected to progressively ramp up from around 250 per year in 2017 to 500 per year in 2022, from 2,500 to 4,500 restaurants in total, including delivery services offered from over 75 per cent of those.

The most significant growth will be in third- and fourth-tier cities, which will by then account for around 45 per cent of its outlets in China.

The expansion plan also includes an increase in its so-called ‘Experience of the Future’ restaurants to over 90 per cent, which Easterbrook said will allow the company to offer digitalised and personalised dining experience to more customers.

“China will soon become our largest market outside of the United States. We are excited to join forces with Citic and Carlyle for better localised decision-making to meet changing customer demands in this dynamic market,” said Easterbrook.

“Mainland China and Hong Kong are leading the global system in capturing new consumer trends such as delivery and digitalisation and its driving strong performance and growth momentum.

“I have great confidence in our new partnership to unlock the full growth potential of China.”

Zhang Yichen, chairman of the new McDonald’s China unit, said: “The partnership [with Citic and Carlyle] will strengthen McDonald’s China’s entrepreneurial spirit, driven by ownership at the local level.

“We believe this is a winning formula that fuses McDonald’s global quality standards and branding with Citic and Carlyle’s extensive resources and market expertise in real estate, finance, supply chains, consumer & retail, and technology.”

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