McDonald's China to expedite its expansion

McDonald's China, the local franchise of the global quick service restaurant or QSR chain, said its business recovery in the first quarter of this year is encouraging it to accelerate its expansion in the country through long-term investments as well as adopt innovative practices to bring more value to consumers.

Late last year, in its fourth-quarter financial report, the company announced it will open a record 900-plus new restaurants in China this year.

On Friday, the QSR chain said it will strengthen its ties with the local supply chain. The restaurant company launched its Regenerative Agriculture Plan, joining hands with nine key suppliers, including Bimbo QSR, Cargill, GSF and Tyson.

McDonald's China procures about 300 ingredients from the local market every year, of which over two-thirds are supplied by the nine suppliers.

All 10 entities have pledged to promote and scale up the ideas and best practices of regenerative agriculture, in order to protect and restore the agricultural environment and ecosystem.

By 2028, about 2,000 core farmers will benefit from the plan. Ten test farms will be established to demonstrate the impacts and benefits of the best practices. Within five years, the main food ingredient categories of McDonald's China will be covered by the Regenerative Agriculture Plan, the company said.

"We are optimistic about the Chinese market in the long term and our investment commitment is firm and steadfast," said Phyllis Cheung, CEO of McDonald's China, on Friday.

"We've launched more than 1,700 new restaurants in the past three years and we'll set a record by introducing more than 900 new restaurants this year."

Market observers said this could effectively mean China will see a new McDonald's QSR open every 10 hours on average this year. Globally, McDonald's plans to open around 1,900 new restaurants this year.

That nearly half of them will be in China shows the importance McDonald's attaches to the country, its second-largest and fastest-growing market. By the end of last year, the company was operating nearly 5,000 restaurants in China, meaning the figure will swell by 18 percent by the end of this year.

Since 2017, McDonald's China has been driving its growth as a franchise business with support from CITIC and Carlyle.

McDonald's investments to enhance natural and fresh food supplies are part of its efforts to consolidate its leading position in the catering sector where competition has been intensifying of late.

Andy Yeung, CFO of Yum China, owner of catering brands KFC and Pizza Hut, said in the company's financial report for the fourth quarter of 2022, that Yum opened a record 538 new stores in the fourth quarter while maintaining a healthy new store payback.

Looking ahead, Yeung said the restaurant chain's priority this year is to drive sales. "We also plan to open between 1,100 and 1,300 new stores in 2023 (in China) and continue to invest in technology and infrastructure."