Expansion Plans Include a Goal of 50,000 Global Locations and Menu Changes
By 2027, McDonald’s wants to have 50,000 locations globally, a hefty increase from its current total of about 41,200 restaurants. These locations include the fast-food brand’s new CosMc’s concept. Clearly the fast-food giant’s worries about the pandemic are over as total consumer spending in the U.S. fast-food sector saw year-over-year growth in 2022 and is projected to hit $320.3 billion by the conclusion of this year, according to Statista.com.
McDonald’s anticipates the expansion will be the “fastest period of growth” in its 60-year history, the company said in a statement on Dec. 6, CBS News reported. While inflation has sent prices at fast food restaurants skyrocketing and prices at limited-service restaurants up 6.2% over the past year, McDonald’s has not felt the pinch: Same-store sales are up 8.1% and the company reported $6.69 billion in revenue for the third quarter. This increased demand has pushed the company to “accelerate the pace of restaurant openings,” the CBS report stated.
McDonald’s Growth Plan
For 2024, McDonald’s expects its net restaurant growth to be 4%, according to NBC’s coverage of the brand’s Dec. 6 investor day. After 2024, McDonald’s plans to grow its restaurant count by 4% to 5% a year. To accomplish this growth, the company projects $2.5 billion in capital spending in 2024; it will have spent about $2.3 billion this year.
To reach its development target, McDonald’s plans to open 900 U.S. locations, 1,900 restaurants in its currently developed international markets (including France, Canada and Australia) and some 7,000 units in its international developmental licensed markets, which include China, NBC reported. Executives previously had stated that its restaurant distribution doesn’t align with U.S. population migration, which has been concentrated in the southern and southeastern United States.
Manu Steijaert, McDonald’s chief customer officer, remarked that it took 33 years for the brand to hit a total of 10,000 restaurants, according to an Associated Press report. But he stated that McDonald’s grew from 30,000 restaurants to 40,000 in just 18 years.
Plans in Store for Coffee and Other Menu Additions
Jo Sempels, president of McDonald’s international licensed markets, told the investors that the company expects coffee sales, already big for the brand, to increase. The company sells 8 million cups of coffee daily, he said. Because McDonald’s has had a fragmented approach with coffee, the brand will clean that up, the AP said in its article. McDonald’s plans to promote just its McCafe brand and reduce equipment suppliers to make its coffee more consistent globally, Sempels said.
The fast-food giant probably will soon reveal more of its tactics for bringing in customers, but the brand already has announced that refinements to burger preparation will make patties juicier. McDonald’s also reported that its chicken sales have now reached $25 billion annually, on par with beef, and are growing fast. It plans to bring its McCrispy chicken sandwich to nearly all global markets by 2025.
Great Expectations for CosMc’s
Also during the investor meeting, McDonald’s revealed that it is already testing the previously announced CosMc’s restaurant format, which will try to siphon customers away from Dunkin’ and Starbucks, the Associated Press reported. It has no dining room and offers customizable beverages and treats designed to appeal to midafternoon snackers, the time when sales decline at most McDonald’s locations.
“This is a $100 billion category that’s growing faster than the rest of [casual dining] and with superior margins. And it’s a space that we believe we have the right to win,” the AP quoted McDonald’s CEO and President Chris Kempczinski as saying. The golden arches will be going head-to-head with Starbucks, which said in November that it plans to open 55,000 stores worldwide by 2030, according to AP. Starbucks has 38,000 stores at present.
CosMc’s will offer complex drinks such as pear-flavored slushes and churro frappes that can’t be fit into existing McDonald’s restaurants. Named for a space alien mascot that McDonald’s introduced in the 1980s, the CosMc’s menu also offers an array of snacks, including pretzel bites, Egg McMuffins, avocado tomatillo sandwich, ice cream and hash-brown bites with iced coffee being a possible chaser, according to a Wall Street Journal article. But no burgers and fries.
Morgan Flatley, McDonald’s Global chief marketing officer, told The Journal that CosMc’s should move McDonald’s into profitable markets such as specialty beverages and coffee where it hasn’t been as competitive. “We knew we needed a differentiated idea, with global appeal, and one with the potential to offer strong returns,” Flatley said.
First 10 CosMc’s Locations
The company said it will launch 10 CosMc’s through June 30, 2024. One will be near the brand’s corporate headquarters in Chicago, and the remainder will be in Texas. The company will analyze results at those locations for at least a year before deciding whether to open additional CosMc’s, AP said.
Many restaurant brands concentrated on to-go ordering in the Covid-19 pandemic, and customers have stuck with it. Only 14% of fast-food orders were eaten in chain dining rooms this year, with the rest taken to-go, market-research company Circana has found.
Kempczinski said he isn’t worried about taking sales away from existing McDonald’s. In the United States, he said, population shifts have left many areas underserved. McDonald’s also wants to prevent competitors from snatching up good real estate, he said.
Cloud Collaboration
Also at the meeting, McDonald’s announced a partnership with Alphabet’s Google Cloud, using its artificial intelligence across its restaurants to improve operations. “We’re excited to see how McDonald’s will use our generative AI, cloud, and edge computing tools to improve their iconic dining experience for their employees and their customers all over the world,” Alphabet CEO Sundar Pichai said in a statement.
Kempczinski said that moving to the cloud will expedite actions such as menu recommendations in drive-through lanes and on order kiosks at McDonald’s locations, AP said.
