McDonald’s to open 10,000 new restaurants over the next four years

The company also announced a partnership with Google Cloud (PA)
The company also announced a partnership with Google Cloud (PA)

McDonald’s expects to open nearly 10,000 restaurants over the next four years, a pace of growth that would be unprecedented even for the world’s largest burger chain.

At an investor update on Wednesday, the Chicago burger giant said it aims to have 50,000 restaurants in operation worldwide by the end of 2027. McDonald’s had 40,275 restaurants at the start of this year.

It plans to open 900 new stores in the US and 1,900 in international markets with company operated and franchised restaurants like Canada, Germany, the UK and Australia.

McDonald’s plans another 7,000 stores in international markets that are operated by licensees. More than half of those stores would be in China.

McDonald’s said the explosive growth of delivery demand makes it critical to get restaurant locations even closer to customers so food can arrive faster and hotter.

McDonald’s delivery made up one billion dollars (£796 million) in global sales in 2017; that has grown to more than 16 billion dollars (£12.7 billion).

Chief executive Chris Kempczinski said new restaurants will have dedicated pickup areas for delivery drivers to ease restaurant congestion. But he said it is important to open actual restaurants and not just delivery-only kitchens.

“Not everybody wants delivery every single meal. Sometimes they want to go to the restaurant with their family,” Mr Kempczinski told The Associated Press.

Mr Kempczinski said he is not concerned about cannibalising sales from existing McDonald’s locations.

In the US, he said, population shifts have left many parts of the country underserved. McDonald’s also wants to prevent competitors from snatching up good property, he said.

Manu Steijaert, McDonald’s chief customer officer, said it took 33 years for the company to open its first 10,000 restaurants; by comparison, it took 18 years to grow from 30,000 to 40,000.

The company is feeling pressure to keep up with fast-growing peers. Starbucks said last month it plans to open 55,000 stores globally by 2030, up from 38,000 today.

McDonald’s also announced a multi-year partnership with Google Cloud. Financial terms of the deal were npt disclosed.

Mr Kempczinski said moving restaurant computations into the cloud, versus relying on slower servers, will speed up things like menu recommendations on ordering kiosks or in the drive-through lane.

The new system will also help managers optimise staffing by, say, recommending an additional person at a drink machine if demand warrants it.

McDonald’s chief financial officer Ian Borden said the company has the confidence to invest in new stores and new technology because of its strong performance.

McDonald’s same-store sales rose nearly 9% worldwide in the third quarter, even as US traffic fell slightly.

The company is focused on core menu items like quarter pounders and fries which, according to McDonald’s, make up 65% of sales systemwide.

Burgers with softer, freshly toasted buns, meltier cheese and more Big Mac sauce are coming to US restaurants by the end of 2024 and most other markets by the end of 2025.

McDonald’s said its chicken sales have now reached 25 billion dollars (£19.9 billion) annually, on a par with beef, and are growing fast. It plans to bring its McCrispy sandwich to nearly all global markets by 2025.

Jo Sempels, president of McDonald’s international licensed markets, said the company also sees significant opportunity to grow coffee sales.

The company already sells eight million cups of coffee each day, he said, but growth has been hampered by a fragmented approach.

McDonald’s plans to promote one brand, McCafe, and whittle down the list of equipment suppliers so its coffee is more consistent globally, Mr Sempels said.