McDonald's To Expand China Presence With 1,000 New Outlets This Year, Says 'Much On Track' For 10,000 Mainland Restaurants By 2028

In a bid to strengthen its position in China, McDonald’s Corp (NYSE:MCD) is set to open 1,000 new outlets in the country this year.

What Happened: The fast-food giant is looking to expand its presence in lower-tier cities, its second-largest market, reported Bloomberg on Tuesday. This move is part of the company’s strategy to tap into new markets as major cities like Beijing and Shanghai become saturated.

"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.

McDonald’s CEO during an analyst call, stated that the company’s goal is to have 10,000 restaurants in mainland China by the end of 2028. This plan aligns with the company’s previous expansion, which saw the opening of 1,000 outlets in 2023.

"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.

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McDonald’s is not the only global chain looking to expand in lesser-known Chinese cities. Approximately 60% of new KFC restaurants in China were opened in lower-tier cities in the first nine months of 2023, according to the state-owned People’s Daily.

Amid China’s economic challenges, companies are turning to these new markets. McDonald’s executives also noted that sales in China are increasingly reliant on promotional campaigns, and the company is prepared to maintain its competitiveness through these campaigns.

Why It Matters: Despite its expansion plans, McDonald’s has faced challenges in its international markets. The company’s Q4 international revenue was impacted by Middle East tensions, although it managed to maintain its growth story through price hikes. The fast-food giant said its U.S. same-store sales rose 4.3% in the fourth quarter and 3.4% worldwide. 

This, however, led to a loss of investor appetite, reflected in the slip of McDonald’s shares on Monday. According to data from Benzinga Pro, the shares closed 3.73% lower at $285.97 apiece.

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