BEIJING: McDonald’s Corp will open 1,000 more outlets in China this year, as it works to expand its presence into lower-tier cities in its second-largest market.
“We think there’s going to be an opportunity for us to continue to build out development and penetration in that market to many places where we don’t really have McDonald’s presence,” CEO Chris Kempczinski said in an analyst call.
The company, which also opened 1,000 outlets in China in 2023, reiterated its goal of having 10,000 mainland restaurants by the end of 2028.
“We’re very much on track from our development aspirations, and we would expect to do something similar in 2024 from that standpoint,” he said.
The Chicago-based fast food giant is just one global chain looking to establish a bigger foothold in lesser-known Chinese cities, as bigger markets like Beijing and Shanghai become saturated.
Roughly 60% of new openings for KFC restaurants in China were located in lower-tier cities in the first nine months of 2023, the state-owned People’s Daily reported in December.
Companies are seeking new horizons on the mainland as the country’s economic woes lead shoppers to pull back.
McDonald’s executives also said they saw sales in the Chinese market getting more reliant on promotional campaigns, with Kempczinski saying the company would “do what we need to do to maintain our competitiveness in that market.”
Consumer brands in China have been doling out sizable discounts and promotions in the past year — with price wars breaking out as they compete to lure shoppers trying to stretch every dollar.
McDonald’s in December raised prices on some of its products by an average of 3%.
Late last year, McDonald’s agreed to buy Carlyle Group Inc’s minority stake in the partnership that runs its business in China, Hong Kong and Macau for an undisclosed price. The chain increased its stake in the partnership to 48% from 20% as part of the deal.