McDonald’s Powers Through 2024 Expansion Plan in China Amidst Economic Challenges

McDonald’s Corporation is undeterred by prevailing economic challenges as it continues its rapid expansion in China, targeting lower-tier cities with an appetite for Western fast food. Despite subdued consumer sentiment, the Chicago-based fast-food giant aims to open approximately 1,000 restaurants in China this year, maintaining the impressive pace set in 2023, a record-breaking year for the company in the country.

This ambitious expansion strategy in China accounts for almost two-thirds of McDonald’s plan for new restaurant openings across all markets outside the U.S., according to Chief Financial Officer Ian Borden's remarks during an analyst call.

CEO Chris Kempczinski expressed optimism about the growth potential in the Chinese market, stating, “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.”

The company reiterates its goal of surpassing 10,000 restaurants in China by the end of 2028, emphasizing a commitment to establishing a strong foothold in both well-known and emerging cities.

Rival Yum China Holdings Inc. already boasts over 14,000 outlets in China and plans to increase this number to 20,000 by 2026, intensifying the competition for market share in lesser-known Chinese cities. Economic uncertainties have led consumers across the country to opt for affordable dining options, making fast food increasingly attractive.

Executives noted a growing reliance on promotional campaigns to drive sales in the Chinese market. Kempczinski stated, “We would expect to do something similar in 2024 from that standpoint,” emphasizing the company's commitment to maintaining competitiveness through strategic promotions.

In response to economic pressures and increasing competition, McDonald’s raised prices on some products by an average of 3% in December 2023. Additionally, the company strengthened its position in the Chinese market by acquiring Carlyle Group Inc.’s minority stake in the partnership managing its business in China, Hong Kong, and Macau.

As McDonald’s navigates the intricate dynamics of the Chinese market, the company remains determined to capitalize on the growing demand for fast food, especially in lower-tier cities, showcasing its resilience and commitment to sustained global expansion.