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McDonald's plans major Asia push

News, 04 April 2016
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BEIJING: McDonald's, the global fast-food chain, plans to add more than 1,000 restaurants in China over the next five years plus another 250 each in Hong Kong and South Korea over the same period.

The company announced in a statement that it already has 2,800 outlets in those three markets, the majority of which are company-owned, but it wants to add 1,500 more because of the potential for high growth.

Significantly, McDonald's said it is looking for local investment partners and franchisees, who would speed up local decision-making and unlock growth.

Bringing in partners would also fit in with meeting the company's long-term strategic goal of becoming 95% franchised and, it hopes, of making China its second-largest market.

"Asia represents a significant area of opportunity for McDonald's to blend our global quality standards with local insights and expertise from partners who share our vision and values," said Steve Easterbrook, president and CEO of McDonald's.

"This will allow McDonald's to accelerate our growth and scale faster across diverse markets placing us closer to our customers and the communities we serve."

McDonald's, like other major food chains, is facing growing competition from local rivals, but it also took a reputational hit in 2014 when an undercover TV documentary discovered unhygienic practices at one of its local suppliers.

The company still has not fully recovered from the scandal, which reinforced concerns among China's notoriously health-conscious consumers.

However, Easterbrook remained bullish about its future prospects in an interview with the Beijing-based China Daily.

"We truly believe we can create strong and sustainable growth in the Chinese mainland, Hong Kong and South Korea, with a mindful introduction of strategic partners who can offer local expertise and competency, blended with the unrivalled global strength of the group, to allow accelerated, long-term growth," he said.

Jason Yu, general manager of research firm Kantar Worldpanel China, told China Daily that any major transformation by McDonald's in China will come about only with serious capital investment and local know-how.

But he added that the deal is the right decision for a global company like McDonald's because it would allow it to deploy its own resources in other emerging markets where growth could be higher.

Data sourced from McDonald’s, China Daily; additional content by Warc staff

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