McDonald's sets eyes on Chinese market

McDonald's China will accelerate the localization process in the country over the next five years, ThePaper reported on Tuesday.

The number of McDonald's restaurants will reach over 10,000 in China's first-tier to fifth-tier cities by 2028, the high-tiers cities will still have the ability to increase the number, said Phyllis Cheung, CEO of McDonald's China, at a group interview to media.

The quantity is not the company's main goal, but rather to become "more powerful", Cheung said.

"China is a market that cannot be ignored, and has great room for growth among global markets; we are confident in the market in the second half of the year."

McDonald's China has developed rapidly in past years, and the future is even more promising, Cheung said.

According to McDonald's fiscal report, its revenue increased 14 percent year-on-year to $6.5 billion in the second quarter of this year, and its net profit reached $2.31 billion, surging 95 percent year-on-year.

McDonald's said that the international developmental licensed markets showing strong comparable sales of 14 percent increase were led by China in the second quarter.

The ownership structure of McDonald's China is unchanged, the shareholders, including CITIC Capital, Carlyle Group and McDonald's are still optimistic about the Chinese market, according to Cheung.

Currently, McDonald's China has not yet considered introducing new investors and new capital, Cheung added.

In order to be closer to the Chinese market and make faster decisions, the current board of McDonald's China has been localized. Moreover, some teams such as data and IT have achieved 100 percent localization, and independent research and development.

The R&D center of McDonald's China has 200 engineers in Nanjing of Jiangsu province, and 80 engineers in Shanghai. The data team has about 40 engineers. Due to the rapid development, the Chinese team will be expanded.

In the past five years, the store opening plan and double-digit revenue growth plan of McDonald's China have been achieved, as well as the number of stores exceeding expectations, Cheung said.

During the past five years, the number of McDonald's restaurants increased to over 5,000, far exceeding the previous target of 4,500 by the end of 2022.

In addition, the number of McCafé stores expanded to nearly 2,500 from 800 over the past two years, and 1,000 new McCafé stores will open in 2023. Currently, the number of McCafé stores reached over 3,200 in the first- and second-tier cities.

More McDonald's restaurants will expand to low-tiers cites, with 50 percent of the restaurants to be set in third- and fourth-tiers cities during next five years, and these restaurants will have more facilities to meet family and party scenes.

In the McDonald's China supply chain, 90 percent of food ingredients come from local products and produce, and its logistics center has increased to 14.