McDonald’s Targets 50,000 Global Restaurants by 2027 as China Expansion Accelerates

This is an English adaptation of a FoodBud historical article originally published on February 13, 2024.

In early February 2024, McDonald’s released its fourth-quarter and full-year results. For fiscal 2023, revenue reached $25.49 billion, up 10% from 2022, while net profit rose 37% to $8.468 billion. Global comparable sales increased 9.0% for the year.

The fastest-growing division was International Developmental Licensed Markets & Corporate, which includes China.

China Remains a Major Expansion Engine

As of December 31, 2023, McDonald’s operated 41,822 restaurants globally. China accounted for 5,903 restaurants, after 925 net new openings in the market during 2023.

On the earnings call, CEO Chris Kempczinski said McDonald’s saw strong growth in China and was pleased with the business performance there. In 2024, McDonald’s planned to open around 1,000 restaurants in China, out of more than 2,100 planned openings globally, with a focus on expanding into lower-tier cities.

The company expected more than 1,600 net new restaurants globally in 2024. At constant exchange rates, net restaurant unit expansion was expected to contribute nearly 2% to systemwide sales growth in 2024.

McDonald’s Raises Its Stake in China

Kempczinski also discussed McDonald’s global acquisition of Carlyle’s minority stake in the strategic partnership covering mainland China, Hong Kong, and Macau. By late January 2024, McDonald’s had completed the transaction, increasing its ownership in McDonald’s China from 20% to 48%.

Kempczinski said the company remained optimistic about China’s outlook, which was why it increased its stake in the region. He said McDonald’s expected continued solid performance as consumer wealth and China’s economy grew, with further opportunity to expand into locations where McDonald’s was not yet present.

On the current operating environment in China, Kempczinski said consumer confidence was under pressure and promotions across the market had become more frequent. McDonald’s would need relevant measures to maintain brand competitiveness. While he did not directly frame the comments as a lower-tier-city strategy, he said that in the U.S. the future battleground would center on lower-income consumers, with greater attention to affordability and absolute price points.

Market Value and Peer Comparison

In March 2022, McDonald’s market capitalization was $175.98 billion, while Starbucks’ was $100.63 billion. Roughly two years later, McDonald’s market capitalization had risen to $208.25 billion, about RMB 1.498 trillion, an 18% increase. Starbucks’ market capitalization stood at $106.28 billion. Among restaurant groups, McDonald’s was the only one above RMB 1 trillion in market value.

Other Highlights From the Q4 2023 Call

• McDonald’s had reached 150 million active members over the previous 90 days. The company planned to expand active membership to 250 million by 2027 and generate $45 billion in sales from those members.
• Chicken products had grown rapidly over the previous three years, reaching $25 billion in annual sales, comparable with beef.
• About a year earlier, McDonald’s had created an internal venture team to identify potential new businesses. The team identified a $100 billion category opportunity, opened one pilot store in less than a year, and had opened 10 test stores at the time of the call.
• The Ready on Arrival program uses mobile location data so that when customers order near a restaurant, employees can be alerted. In pilot stores, the feature reduced average customer waiting time by 60 seconds.
• McDonald’s planned to reach 50,000 restaurants globally by the end of 2027. It also expected to reach 10,000 restaurants in China by the end of 2028.

Note: forward targets, ownership, market capitalization, and IPO-style financial figures are historical as of the article’s February 13, 2024 publication context.