McDonald’s plots rapid growth with 10,000 new stores, loyalty expansion

Reuters | December 7, 2023

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By Deborah Mary Sophia

(Reuters) -McDonald’s is planning to open about 10,000 restaurants globally by 2027, in what could be the fast-food giant’s fastest period of growth in its history, it said on Wednesday.

The company also laid out plans to double sales from its loyalty program to $45 billion and increase the user base to 250 million customers by 2027. The program currently has 150 million users, generating over $20 billion in annual system-wide sales.

Despite choppy U.S. consumer spending, McDonald’s has remained largely unaffected, thanks to its affordable menu items, aggressive promotions and marketing campaigns.

CEO Chris Kempczinski said during the company’s investor day he was a little bit wary of making any predictions about next year, because the company has seen the consumer to be “very resilient.”

McDonald’s will open about 7,000 stores in its international developmental licensed markets, which include countries such as China, India, Japan and Brazil, CFO Ian Borden said.

Borden added that more than half of those new stores are planned for China, McDonald’s second-largest market, where it recently struck a deal that allows it to have greater control over its business in the region.

Globally, the expansion would boost the number of stores to about 50,000 by 2027.

McDonald’s “Best Burger” initiative aimed at improving the quality of its burgers will also be deployed to nearly all markets by 2026, expanding from about 70 markets currently.

For 2024, McDonald’s expects nearly 2% growth in system-wide sales from new restaurants, on a constant currency basis, compared with the 1.5% growth it expects for 2023.

“It sounds ambitious, but definitely exciting if they can execute it at scale… there’s no reason to think that they’re not able to achieve this,” Stephens analyst Joshua Long said.

The company also said it was seeing an impact to business across a number of the markets in the Middle East and a limited number of markets outside the region due to the ongoing conflict.

McDonald’s also partnered with Alphabet’s Google Cloud to deploy artificial intelligence (AI) solutions to its restaurants worldwide, which would give the company more visibility into each store, provide cost savings opportunities and help deliver hotter, fresher food to customers faster.

McDonald’s shares closed flat on Wednesday. The stock has risen about 8% this year, underperforming the 19% increase in the benchmark S&P 500 index.

(Reporting by Deborah Sophia in Bengaluru; additional reporting by Ananya Mariam Rajesh; Editing by Anil D’Silva and Shailesh Kuber)