McDonald's (China) Co Ltd CEO Phyllis Cheung speaks at the annual McBanquet event on Friday. SUPPLIED/CHINA DAILY
Mcdonald's (China) Co Ltd is expected to speed up its expansion to the nation's lower-tier cites to attract new customers and to update its menu with more nutritious and iconic food items, CEO Phyllis Cheung said.
As McDonald's Corp missed profit expectations in the third quarter of this year, weighed down by decreased sales in the US amid heating competition, Cheung said the number of new McDonald's outlets in China this year is expected to equal or slightly exceed last year's level, at 423.
The speed at which those stores are being opened is going to surpass the company's five year goal by 2022 to add 2,000 restaurants to the 2,500 outlets it had in 2017, she said.
Cheung said nearly half of the new restaurants are located in third-or fourth-tier cities and McDonald's will continue to penetrate more cities in their expansion to gain new customers and increase brand awareness among the potential customers.
In 2017, the US chain sold most of its businesses in the Chinese mainland and in Hong Kong to Citic Ltd and private equity group Carlyle Group LP for up to $2.1 billion. Citic took the majority stake of 52 per cent in McDonald's China operations. The deal has given the fast-food giant more localised resources and access to Chinese consumers.
"McDonald's has to gain their growth from expansion when their market saturation is high in first-and second-tier cities," said Zhu Danpeng, an independent food and beverage analyst.
"But how to differentiate them from the fierce competition with other Western food chain brands is to highlight the strengths of their products."
McDonald's China on Friday announced it has joined hands with global media and entertainment giant Walt Disney Co to launch themed Happy Meals based on Disney movies.
The collaboration with Disney covers the period from 2019 to 2025. China is the second market to launch this campaign. Last February, the two companies reached a multi-year agreement to bring the magic of characters from Disney films to updated Happy Meals in the US market.
The selected movies will be new releases from Disney's stable of studios. They include Walt Disney Animation Studios, Pixar Animation Studios, Disney Live Action, Marvel Studios and Lucasfilm.
The first batch of Happy Meal's free toys designed with Disney movie characters will be launched at all McDonald's stores in China on November 13 and the first film to be tied up will be Frozen 2, which arrives in theatres in the US on November 22.
"Our partnership begins with toys inspired by Disney movie characters but it is more than that," said Cheung. "Disney has a strong presence in China in terms of its parks and consumer products. There is a lot of potential for our alliances in the future."
The launch is also part of efforts to celebrate the 40th anniversary this year of the Happy Meals. Cheung said the company has upgraded its Happy Meals from a three-item menu to a four-item menu with the addition of healthy fruit and vegetable options.
The price will increase by two yuan but the toys will remain free, she said. Last year, McDonald's China sold more than 27 million Happy Meals, including more than 16 million servings of milk and more than 5.7 million servings of fruit and vegetables.
McDonald's Corp stocks sank 5.04 per cent to $199.27 at Tuesday's close (NYSE: MCD).
CHINA DAILY/ASIA NEWS NETWORK
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