McDonald’s aims to open more than 8,800 new locations and increase its loyalty program membership by 100 million before 2027. These goals are part of the company’s long-term strategy to boost sales in its widespread chain of restaurants.
According to a report, McDonald’s shared these targets in preparation for its investor day, with the intention of assuring shareholders that people still enjoy their Big Macs and McNuggets. This comes as concerns about the economy and competition from weight-loss drugs are on the rise on Wall Street.
The company plans to provide more details on how it intends to attract customers, including introducing an improved burger and focusing more on chicken.
Growing More Restaurants and Investing More Money
In 2024, McDonald’s expects its number of new restaurants to increase by 4%. Around 2% of the total sales growth in constant currency for the upcoming year will result from expanding its restaurant presence.
Beyond 2024, the company aims to annually grow its restaurant count by 4% to 5%. These new establishments are anticipated to contribute approximately 2.5% to the overall systemwide sales growth in constant currency.
McDonald’s extensive growth plans will lead to higher capital spending. In 2024, the company foresees $2.5 billion in capital expenditures, an increase from the expected range of $2.2 billion to $2.4 billion in 2023. Additionally, McDonald’s plans to incrementally raise its capital expenditures by $300 million to $500 million each year from 2025 through 2027.
By 2027, McDonald’s aims to have a global presence with 50,000 locations. As of September 30, the chain had 41,198 restaurants worldwide. For comparison, Starbucks announced in November that it aims to have 55,000 cafes worldwide by 2030, surpassing its current count of more than 38,000.
To achieve its growth goal, McDonald’s intends to launch 900 locations in the United States, approximately 1,900 restaurants in its international operated markets segment, and around 7,000 units in its international developmental licensed markets division.
The international operated markets (IOM) business of the company covers regions such as France, Canada, and Australia, contributing to almost half (50%) of the company’s total revenue.
Expanding in China and Growing Loyalty Program
McDonald’s International Developmental Licensed (IDL) segment encompasses China, and China is expected to contribute to more than half of the new locations in this division. In late November, McDonald’s disclosed that it had repurchased a minority stake in its China business, which currently operates in over 5,500 restaurants.
McDonald’s CEO, Chris Kempczinski, expressed optimism, stating, “There’s no reason why China can’t have [20,000] to 25,000 stores or restaurants — it could become the largest market for us globally.”
Company leaders have indicated that their existing presence is not in line with current consumer demographics, especially considering the population shift towards the South and Southeast in the U.S.
Back in January, as part of a larger announcement regarding corporate restructuring, Kempczinski stated that the company would speed up the development of new restaurants. This marks the first time the company has made public its specific targets for new development.
In addition to the ambitious plan to open new flagship restaurants, the company will explore expansion through a spinoff brand called CosMc’s. They plan to test 10 CosMc’s locations by the end of 2024, with the first one opening this week in Illinois.
Apart from its ambitious expansion goals, McDonald’s aims to achieve a quarter of a billion active members in its loyalty program by 2027. During its previous investor day in 2020, the company was still in the testing phase for the loyalty program in the U.S. However, it has since become a significant success, boosting mobile sales and encouraging customers to return more frequently.
McDonald’s is emphasizing its loyalty program, especially as marketers are concerned about a “cookieless future,” where third-party data on customers becomes scarce. Moreover, in September, McDonald’s raises royalty fees for new franchisees for the first time in almost 30 years.
According to Morgan Flatley, McDonald’s Global Chief Marketing Officer and Executive Vice President of New Business Ventures, the company is gearing up by introducing new ways to earn points, such as watching sports games on its app, and offering perks like transferring points to family and friends.
McDonald’s is getting ready to rely solely on the data it collects through its own mobile app.
“In the coming years, data will be as crucial a competitive advantage as the locations of our restaurants,” stated McDonald’s U.S. President Joe Erlinger during a presentation to investors on Wednesday.
McDonald’s has additionally revealed a collaboration with Alphabet’s Google Cloud, employing its artificial intelligence capabilities across its restaurants to enhance operational efficiency.
“We’re eager to witness how McDonald’s will leverage our generative AI, cloud services, and edge computing tools to enhance their renowned dining experience for both employees and customers globally,” commented Alphabet CEO Sundar Pichai in a statement.
McDonald’s has big plans, opening lots of new restaurants and gaining millions more loyalty program members. They’re assuring investors about their strategy, emphasizing global expansion, tech investments, and menu updates. The company is eyeing significant growth in China and relying on data-driven marketing for success.