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McDonald’s has detailed its strategy for growth in China, after it completed the divestiture of its local operations to a new partnership between itself, Chinese conglomerate Citic and asset management company Carlyle.
The fast-food chain has completed the $2 billion spin-off, news of which first emerged in January.
The strategy – dubbed Vision 2022 – aims to drive double-digit sales growth in each of the next five years by increasing the number of McDonald’s restaurants in mainland China from 2,500 to 4,500, including delivery hub coverage of over 75%, by the end of 2022.
In addition, Vision 2022 includes plans to significantly increase the proportion of McDonald’s restaurants in so-called tier three and tier four cities to 45%. These cities are smaller urban areas, typically at prefecture or county level, that tend to have populations of up to 150,000 and GDPs of less than $67 billion.
It also includes plans to extend McDonald’s Experience of the Future concept to over 90% of restaurants in China, which will enable the brand to offer digitalised and personalised dining experiences to more customers. As part of its digital offering, McDonald’s has backed a number of technological innovations in recent years, including touchscreen ordering in store and table service in some locations.
But the company has stepped up its efforts in recent months, competing with Burger King to roll out a mobile ordering platform and undertaking the largest expansion of its McDelivery partnership with UberEats since the project’s inception.
It’s under pressure from other fast-food rivals like Domino’s, which recently added Amazon Alexa to its extensive portfolio of digital ordering capabilities.
McDonald’s president and CEO Steve Easterbrook said: “China will soon become our largest market outside of the United States. We are excited to join forces with Citic and Carlyle for better localised decision-making to meet changing customer demands in this dynamic market. Mainland China and Hong Kong are leading the global system in capturing new consumer trends such as delivery and digitalisation and its driving strong performance and growth momentum.
“I have great confidence in our new partnership to unlock the full growth potential of China. McDonald’s Corporation will continue to play an active part in the China growth journey through our remaining interest and participation on the China board.”
And McDonald’s China chairman Zhang Yichen said: “The partnership will strengthen McDonald’s China’s entrepreneurial spirit, driven by ownership at the local level. It will also help us ensure first-class customer service and food safety while accelerating our growth in mainland China and Hong Kong. We believe this is a winning formula that fuses McDonald’s global quality standards and branding with CITIC and Carlyle’s extensive resources and market expertise in real estate, finance, supply chains, consumer & retail, and technology.”
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