With sales in the United States up and the company’s overall outlook improving, McDonald’s is targeting another big push in Asia. On Thursday, Mickey D’s announced “its intent to identify strategic partners who will add value and unlock growth potential in key markets throughout Asia to advance the company’s future growth plans.”
Specifically, the chain hopes to open 1,500 new restaurants in China, Hong Kong, and Korea over the next five years. In a prepared statement, McDonald’s president and chief executive officer Steve Easterbrook confirmed the plans are part of an overall strategy to make the company’s recent success permanent. “These actions build on our turnaround efforts and will advance local ownership, enable faster decision-making, and achieve restaurant growth,” Easterbrook said.
McDonald’s had been slumping for years, leading to serious pessimism among franchisees and causing some to wonder if the company was doomed. But then the Golden Arches launched all-day breakfast in the U.S. last fall, and its fortunes reversed almost immediately. The chain posted a quarterly sales increase for the first time in two years in October, and it followed with even stronger quarterly numbers in January. Now, McDonald’s may be looking to capitalize by expanding its all-day breakfast menu.
McDonald’s already operates 2,800 locations in China, Hong Kong, and Korea. A market analyst tells CNBC further expansion in Asia “offers by far the largest long-term growth opportunity,” but McDonald’s has to be careful with its overall goals.
“In terms of tailoring their strategy, McDonald’s will need to focus on winning back public support, offering a consistent, high-quality experience, and tailoring their offer to local flavors while preserving some of the Western appeal that gained them popularity in the first place. It’s a difficult balance,” strategy analyst for consumer foodservice at Euromonitor Elizabeth Friend told CNBC.
Despite the all-day breakfast success, impressive two-quarter run, and seemingly smart intentions to expand in Asia, there is a potential pitfall that could harm McDonald’s in the not-too-distant future: rising minimum wage. CNBC notes McDonald’s enjoys some insulation on the issue because most of its American restaurants are owned by franchisees, not the company. But as the movement to increase fast food workers’ pay gains momentum, it may pose a threat to the chain.