McDonald's China eyes 10,000 outlets

McDonald's China's plan to open 1,000 new stores annually and reach as many as 10,000 locations by 2028 is on track, boosted by innovation and localization, according to its top executive.

The food service chain unveiled a report recently to mark the eighth anniversary of its transition to a developmental licensee model under the "Jin Gong Men" (golden arches) banner. McDonald's China was acquired by a consortium led by CITIC Capital in 2017.

The report coincides with the company's rapid expansion, with more than 7,100 outlets across 280 cities — more than triple the number in 2017 — and over 1.3 billion annual customer visits.

Phyllis Cheung, CEO of McDonald's China, said, "The 'Jin Gong Men' model — a global brand empowered by local ownership and operations — has enabled us to respond faster to market dynamics, drive innovation, and scale impact across food, sustainability, talent, and community."

McDonald's China has committed to local execution across management, operations, and innovation. Cheung said the fully localized management team allows the company to stay "closer to customers" and move "faster than ever", making decisions independently and feeding successful China-born innovations, like its spicy menu series and CUBE-style restaurant design, back into McDonald's global system.

"We have a Chinese team and Chinese speed. That's our local advantage," Cheung said. "Even our suppliers in China are producing to a level where their products — like pies and chicken — are being considered for global distribution."

Speaking on store expansion, the CEO said the chain "has long-term confidence in the Chinese market "and is opening two to three new stores every day. "By year-end, we will expand into the Ningxia Hui autonomous region and Qinghai province, achieving 100 percent coverage of all provincial-level administrative regions on the Chinese mainland."

The company also plans to penetrate further in the market to accelerate development into third and fourth-tier cities. China's consumer landscape is evolving rapidly, with a growing focus on value-for-money and a dislike of overpaying. McDonald's has responded with pricing innovations such as its 22.9 yuan ($3.18) set meal known as the "Big Bite Meal".

The company considers its supply chain one of its pillars of strength. With over 90 percent of ingredients sourced locally, the company leverages its supply chain to maintain pricing power and quality. It has invested more than 12 billion yuan alongside suppliers in the past five years to build the McDonald's China supply chain ecosystem.

Innovation has also propelled its communication with consumers. Its menu is continuously refreshed with offerings catering to local tastes and consumption trends, such as the breakfast combo (9.9 yuan) and protein-packed beef burger for fitness-focused consumers.

Digital transformation also enhances its customer experiences. Nearly 90 percent of McDonald's China orders are placed via mobile devices or self-order kiosks. More than 6,000 stores feature smart pick-up lockers, allowing contactless retrieval through QR code scans.

They are not just digitizing operations, said the CEO. "Customers can choose when and how to place and pick up their orders, giving them a sense of autonomy and control," Cheung said.

Changes in consumer lifestyles are also quickly reflected in how McDonald's China innovates around consumption scenarios. The company is piloting voice-activated drive-through orders designed for new energy vehicle drivers, said the CEO.

Listening to their customers is what keeps them localized and innovative. McDonald's China tracks more than 20,000 daily social media posts related to the brand.

"We hold regular focus groups to go deeper into what customers love — or don't love — about our offerings," Cheung said. "Our goal is not just to grow with China, but to co-create with Chinese consumers."

wangzhuoqiong@chinadaily.com.cn