Date
26 July 2017
McDonald's is making a bullish bet on Chinese consumers with a plan to add more than 1,000 restaurants in mainland China. Photo: Internet
McDonald's is making a bullish bet on Chinese consumers with a plan to add more than 1,000 restaurants in mainland China. Photo: Internet

McDonald’s plans 1,000-restaurant expansion in China

McDonald’s Corp. is looking for investors for a planned expansion in mainland China despite a rough recent history in the country.

The US fast-food giant is planning to add more than 1,000 restaurants in the mainland, joining a number of companies that have made bullish bets on Chinese consumers, the Wall Street Journal reports, citing chief executive Steve Easterbrook.

Easterbrook said that while larger discretionary items are taking a hit amid the slowdown, smaller splurges like fast-food meals will stay strong.

“For everyday affordable spends like us, we’re confident in the consumer,” he said.

McDonald’s expansion plans mirror those of several other multinationals, especially in the entertainment, sports and casual-dining sectors.

Starbucks Corp. aims to open 500 stores in China a year for the next five years while Adidas A.G. is planning to add 3,000 stores in China over the same period for a total of 12,000 stores.

That contrasts with travails for auto and luxury companies.

General Motors Co., Ford Motor Co. Hyundai Motor Co. and Mazda Motor Corp all posted steep sales declines in China in February, year-over-year.

German retailer Hugo Boss AG and Kering S.A.’s boutique brand Bottega Veneta closed stores in China last year, according to consultancy Bain & Co., which said total luxury closures, ranging from Armani to Hermès, reached 58.

McDonald’s expansion plans in China come after a bumpy few years for its Chinese sales following problems with one of its suppliers in 2014 left some of its restaurants without chicken or hamburgers.

It is still struggling to regain consumers’ trust, industry watchers say.

”It isn’t getting back more loyal customers,” said James Roy, associate principal at the Shanghai-based consultancy, China Market Research.

McDonald’s said last year it was closing 350 restaurants in China, Japan and the US.

Ninety of those were in China.

Chinese consumers are also increasingly health-conscious and skeptical of fast food.

In addition, Western chains face more competition from Chinese fast-food rivals. In a survey of 10,000 consumers across China, 51 percent said they consumed Western fast food in 2015, down from 67% in 2012, according to consultancy McKinsey & Co.

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