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McDonald's ups China store openings

News, 09 August 2017
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SHANGHAI: McDonald's intends to open around 2,000 new stores in China over the next five years, with a focus on tier 3-4 cities.

The figure is more than envisaged when, earlier this year, the QSR chain announced it was selling an 80% stake in its China business to a consortium led by state-run investor Citic in order to enable faster expansion. At that time the plan was to add another 1,500 restaurants.

It now expects to have a total of 4,500 stores in China by the end of 2022 as it looks to increase the rate of new store openings from the current 250 a year to 500 a year.

“China will soon become our largest market outside of the United States,” said Steve Easterbrook, McDonald's chief executive as he welcomed the completion of the partnership with Citic and The Carlyle Group, which gained regulatory approval last week.

He anticipated this would lead to “better localized decision-making to meet changing customer demands in this dynamic market”.

As part of the company’s Vision 2022 plan, 45% of the new stores will be in third or fourth tier cities, and three quarters of these will offer both a take-out and delivery service.

There will also be more “Experience of the Future” restaurants which offer a digitalized and personalized dining experience, while menu innovation will be a key focus.

But meeting such ambitious goals may be difficult in a market where there are many competitive local brands and mobile delivery apps are altering the landscape.

“I’m not convinced Citic and Carlyle know how to run a fast food business,” said Shaun Rein, managing director for Shanghai market consultancy CMR China.

“You run into issues of quality control and standardisation if you double in size in such a short time,” he told the Financial Times.

Data sourced from Reuters, Financial Times; additional content by WARC staff

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