Eleven years after opening its first McCafé in China, fast food chain McDonald’s plans to expand its estate of in-store cafés to 4,000 outlets on the Chinese mainland by the end of 2023.
The company announced this week that it will invest 2.5bn yuan ($381m) over the next three years with the aim of ensuring that, whenever Chinese consumers come across a McDonald’s, they’ll also find a McCafé.
McCafés tend to have their own counters and seating areas within larger McDonald’s stores, yet only about a third of McDonald’s 3,600 restaurants in China currently host a McCafé.
However, the company passed a major milestone with the opening of its 1,000th China McCafé in May this year and expects to have 1,500 stores nationwide by the end of 2020, Caixin reported, as it seeks to tap into the country’s rapidly growing demand for coffee.
“As China’s coffee market grows with speed, consumers will understand more about coffee and fall in love with it. Today, we’re very pleased to announce the across-the-board brand upgrade plan for McCafé,” said Phyllis Cheung, CEO of McDonald’s China. “Our goal is clear: Where there is McDonald’s, there is McCafé.”
According to a report last year from research firm Frost & Sullivan, the coffee market in China is expected to triple from 56.9bn yuan in 2018 to 180.6bn yuan in 2023.
Over the same period, the number of cups of coffee consumed each year is forecast to double to 15.5 billion by 2023. And to give an idea of the huge potential open to coffee brands, the report also noted that Chinese coffee consumption in 2018 was only 1.6% that of the US.
American coffee chain Starbucks is the current market leader with around 4,700 stores in China, while it is estimated Chinese rival Luckin has about 4,000 outlets. KFC and Canadian chain Tim Hortons also have a significant presence.
With McDonald’s ramping up its challenge to the established players, it will be interesting to see whether its mid-range pricing strategy will work alongside its plan next year to focus on second-tier cities.
Sourced from Caixin