McDonald's is offering an exciting growth plan for its investors to expand its global customer base.
This chain catering giant announced on Investor Day on Wednesday that it plans to expand its global store count to 50000 (currently around 41200) by the end of 2027, which will be the fastest store expansion speed in McDonald's history. McDonald's will also make significant investments in AI technology, loyalty programs, and other areas.
McDonald's CEO Chris Kempczinski said in an interview that the company has now modernized its existing storefronts, and it is time to seize the opportunity to build new restaurants. In 2024, as consumers increasingly pursue cost-effectiveness, McDonald's plans to seize this opportunity.
With the onset of the cost of living crisis, consumers usually purchase cheaper fast food products such as McDonald's, and McDonald's is largely unaffected by fluctuations in consumer spending.
Kempczinski took office in November 2019 and has been attempting to increase McDonald's profits in recent years through his push for the Accelerating the Arches program.
The latest expansion plan includes building 900 new restaurants in the United States, 1900 new restaurants in the international market operated by our own restaurants, and 7000 new restaurants in the international market operated through authorized partners. McDonald's plans to expand the number of 90 day active users from 150 million to 250 million by 2027.
As of the end of the third quarter, McDonald's had a total of 41198 chain stores worldwide, of which over 39000 were franchise stores and the rest were self operated.
Massive expansion in China
It is reported that more than half of the 7000 international restaurants planned to operate through authorized partners will be located in China. Kempczinski stated that China will eventually (replace the United States) become McDonald's largest market.
China has always been an important battleground for American food and beverage chains to seize market share, with major competitors including giants such as Starbucks and KFC owner Yum! Brands.
Kempczinski pointed out that there are three factors that make him "very optimistic about the prospects of China": the potential to open new stores, the growth of same store sales, and the improvement of profit margins.
Kempczinski stated that the company plans to increase the number of restaurants in China from 6000 to 10000 by 2028.
"We know that household income is closely related to the average foot traffic of restaurants," Kempczinski explained, "and if you look at China and continue to assume that their GDP has achieved median (4% -6%) growth, this will directly translate into household income."
In fact, McDonald's is ready to get a bigger share of the cake in China. At the end of November, McDonald's announced an agreement to repurchase a minority stake in Carlyle's Chinese business for $1.8 billion. After the completion of this transaction, McDonald's shareholding in Golden Arch will increase from 20% to 48%, while CITIC Capital, the main shareholder of CITIC Capital, will continue to hold 52% of the shares.
Generative artificial intelligence is another area that McDonald's is seeking investment in. McDonald's has announced a partnership with Google Cloud and is currently testing a product called& Quota; RGM Boss& Quota; The artificial intelligence platform. In her speech on Investor Day, Zhang Jiayin, CEO of McDonald's China, stated that the platform has "improved restaurant efficiency and increased profit margins by 30 points.".
The functions of this platform include: automated employee scheduling, predicting the number of guests (with an accuracy rate of 85%), and shortening inventory inspection time (from one hour to 15 minutes).
Launching new concept restaurants
It is worth mentioning that at the latest Investor Day event, the company also gave a detailed introduction to its first new concept restaurant, CosMc's, launched in the United States over 60 years of history.
The chain restaurants in this plan are part of McDonald's increased bet on takeout dining, aiming to get a share of the pie from chilled beverage sales - which may impact Starbucks' territory. The popularity of chilled beverage sales has just helped Starbucks set a sales record.
CosMc's will be named after the orange alien mascot from McDonald's past advertisements. This new concept restaurant will not offer a large number of McDonald's signature fries and burgers - the store will only offer a limited variety of food menus, including avocado tomato sandwiches, McDonald's cheese egg wheat full breakfast, ice cream and potato patties and other snacks.
Correspondingly, CosMc's will focus on customized chilled beverages, including flavored lemonade, turmeric latte, pear smoothies, and snow cheese ice cream.
According to McDonald's promotion, the first CosMc's store to open in the suburbs of Chicago this month will have four driveways, no dining space, and a smaller storefront than traditional McDonald's.
The De Lai Expressway is a service designed for fast food restaurants, where customers can place orders in the car through voice or use the touch screen installed in the car to order food, and pay for pick-up through a free car. McDonald's and other chain restaurants have stated that consumers are increasingly ordering takeout or takeout rather than dine in, and the restaurant's design is to cater to this trend.
Of course, McDonald's past efforts to expand beyond its main business have not always been successful, but Kempczinski believes that CosMc's can move from the United States to the world in the future. Kempczinski said, "We're not worth spending time developing an idea that can only work in one market.".
McDonald's Global Chief Marketing Officer Morgan Flatley stated that this concept store is a way for McDonald's to enter lucrative markets such as specialty drinks and coffee, where McDonald's competitiveness has always been weak.