Business Intelligence on Retailing, Franchising, and Consumerism in China


Fast Growth Equals More Fast Food For McDonald's In China

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Zeng Qishan, chief executive officer of McDonald's China, says that the company plans to add 300 new restaurants in China in 2014.

According to Zeng's comments made to local media, McDonald's China has an active expansion plan; however, they need to maintain a proper expansion speed and pay attention to infrastructure construction.

In 2013, McDonald's' expansion in China slowed. By restaurant numbers, it was exceeded by its competitor Dicos in the Chinese mainland market for the first time. By the end of April 2014, McDonald's will open its 2,000th restaurant in mainland China. In 2013, McDonald's opened 275 new restaurants in China and the company plans to open 300 new outlets in 2014.

Zeng said that over the next few years, McDonald's China will focus on franchise development and the goal is to raise the ratio of franchised restaurants. In 2013, the ratio was 12% and the company expects to increase it to 20% to 25% by 2015. McDonald's launched the franchising model in China in 2008 and only three franchisees participated in this project at that time. By the end of 2013, the number increased to 46. Zeng added that McDonald's has strict requirements for franchisees. They hope the franchisees have the abilities to run three or four restaurants instead of just one, which will help share the risk.

At present, McDonald's is promoting the franchising model in first-tier Chinese cities. According to McDonald's' annual results for 2012, the gross profit of franchising business was USD7.437 billion, which was much higher than the USD3.379 billion contributed by company-owned restaurants.

In addition, McDonald's is committed to add Chinese features to its restaurants in China, with a new design concept named "Eatery".





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