McDonald’s to add more than 1,500 outlets in China, HK, Korea

McDonald’s Corp plans to add more than 1,500 restaurants in China, Hong Kong and South Korea over the next five years as it focuses on high-growth markets to boost sales.

The company, known for its Big Mac burgers, said it was seeking franchise partners in those three markets, where it already has more than 2,800 restaurants, most of them company-owned.

China, Hong Kong and South Korea, along with a few other high-growth markets such as Russia, accounted for nearly a quarter of McDonald’s total sales in 2015.

McDonald’s, which converted about 470 company-owned restaurants to franchises last year, plans to franchise 95 per cent of its outlets worldwide in the long-term.

More than 80 per cent of its 36,000-plus restaurants are currently operated by franchisees.

Oak Brook, Illinois-based McDonald’s said it was looking for partners who would “enable localized decisions on growth initiatives” in China, Hong Kong and South Korea.

McDonald’s and rival Yum Brands Inc, the owner of KFC and Pizza Hut, have been facing increasing competition from cheaper local rivals, particularly in China, where they are trying to recover from food safety scares.

China, which is home to the third largest number of McDonald’s restaurants, is Yum’s biggest market.

Sales took a hit after Chinese regulators launched a probe into a local meat supplier in 2014 for allegedly mixing meat beyond its expiration date with fresh meat.

A Reuters analysis of same-store sales data suggests McDonald’s is recovering faster than Yum in China.

Researchers and consumers said there’s no simple answer to explain why one is faring better than the other, but the scandals seem to have stuck to KFC much more than McDonald’s in consumers’ minds.

McDonald’s shares rose to a record high of $126.76 in early trading on Thursday. The stock has risen about 29 percent in the last 12 months, outperforming the 18 percent rise in the S&P 500 restaurants Sub index. (Reporting by Subrat Patnaik and Sruthi Ramakrishan in Bengaluru; Editing by Don Sebastian and Anupama Dwivedi)