McDonald's to Double Restaurants in China

By ESTHER FUNG
From http://online.wsj.com/

SHANGHAI — U.S. fast-food giant McDonald's Corp. plans to nearly double its presence in the world's fastest developing economy over the next few years, senior officials from the company said Tuesday after they launched the first McDonald's Hamburger University in China.

McDonald's outlined its ambitious China plans at a time when relations between foreign businesses and Beijing are souring, with a growing number of Western companies complaining of a deteriorating operating environment in the country.

McDonald's, which has about 1,100 outlets in China expects to boost that number to a total of 2,000 by the end of 2013, said Tim Fenton, the company's president of Asia Pacific, Middle East and Africa, in an interview.

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Associated Press

McDonald's employees attend a training course demonstration Tuesday at the newly opened McDonald's Hamburger University in Shanghai.

The company opened just under 150 outlets in the country last year, and expects to open 150 to 175 outlets in China this year, Mr. Fenton said.

"China is our fastest-growing [market] from the income standpoint and from the revenue standpoint," he said.

The company opened its first outlet in China in Shenzhen in 1990 and now employs more than 60,000 people in the country.

The new outlets targeted for this year will create 10,000 jobs in China, Kenneth Chan, McDonald's China chief executive, said at a news conference earlier Tuesday.

The Hamburger University in Shanghai is the seventh in the world, and serves as the company's training school for areas such as local talent development and real-estate management. The company said the Shanghai school represented an investment of 250 million yuan ($36.6 million).

McDonald's global target for 2010 is to record sales growth of 3%-5% and income growth of 7%-9%, said Mr. Fenton. "And we expect China to be above that." The company posted net income of $4.55 billion on revenue of $22.74 billion for 2009.

China accounts for around 23% of McDonald's revenue from the Asia Pacific, Middle East and Africa regions, and its share is growing, Mr. Fenton said.

"The informal eating-out industry in China is about $300 billion right now, and it will grow about 10% this year," Mr. Fenton said, attributing the projected growth to the country's growing middle class.

Mr. Fenton said that while globally, around 80% of McDonald's outlets are franchised, the company has only six franchised outlets in China, It plans to franchise more over the next three to five years, Mr. Fenton said, declining to give specific targets.