Yum Brands boasts banner quarter as McDonald's seeks to grow franchising

Zeng Qishan, chief executive officer for Yum rival McDonald's China, told media at a launch event on April 18 that the company will increase its franchise proportion to as much as 25 percent of its stores in China by 2015, up from the current 12 percent.

Chinese fast food firms challenging McDonald's

Yum warns of delay in China sales recovery

Last year, the company opened 276 new stores in China and expects to see another 300 new stores open this year.

On April 22, McDonald's Corp announced results for the first quarter ending March 31, with comparable sales up 0.8 percent and operating income down 10 percent in the US, Asia Pacific, the Middle East and Africa.

McDonald's is now focusing on stabilizing key priority markets, including the US, Germany, Australia and Japan.

Despite being the world's leader in fast-food chains, McDonald's lags behind KFC in the number of stores it has in China. Industry experts consider its plan to now expand in China through franchising to have missed the boat.

Zeng said it took 18 years for McDonald's to open its first 1,000 stores but only five years for its second 1,000 stores in China.

He said it is concentrating on first-tier cities with a focus on franchising. Globally, its franchise ratio is 80 percent, but on the Chinese mainland, it is only 12 percent.

"McDonald's locations in second- and third-tier cities are losing to those of KFC, but that the new franchising push should quickly boost its presences in China.," said industry analyst Gao.