McDonald’s Corp expects China to be the engine of growth in the Asia Pacific over the next five years and predicts a good first quarter for same-store sales in the Asia, Middle East and Africa region.
The firm expects to have more than 2,000 stores in mainland China by the end of 2013 and 1,300 at the end of 2010, Tim Fenton, McDonald’s president for Asia, Pacific, Middle East and Africa told Reuters on Tuesday.
“Asia, Middle East and Africa is the fastest growing area in the world and of that, China is the fastest growing country,” Fenton said, adding that he plans to open a total 520 new stores in the region this year.
McDonald’s reported a better-than-expected 4.8 percent rise in February sales at established restaurants as Asia helped offset softness in the United States and Europe.
The firm is due to report its March sales on April 21.
“We are a little bit ahead of what we had planned to do, so that’s always nice ... but we do see things changing. We see the economy getting better,” Fenton said.
“We will have a good first quarter,” he said of his region’s same-store sales.
Fenton was in Shanghai to open McDonald’s first Hamburger University in mainland China.
McDonald’s said in January it expects to boost its capital investment in China by about a quarter this year and open 150 to 175 restaurants in the mainland to tap the growth of the world’s third-largest economy.
McDonald’s will roll out between 40-50 McCafes in China this year, up from the three it currently has to capitalise on the country’s increasing taste for coffee.
McDonald’s boom in China is due to its growing middle class affluence that has led to high growth in the fast food and casual dining industry, Fenton said.
Quoting third party data, he added that China’s fast food and casual dining industry, growing at 10 percent, could reach $310 billion this year. That compared with $460 billion in the United States, expanding at 2 percent, and $470 billion in Europe, with flat growth.
“Just China alone, if you do the math, in 5-10 years, they could surpass the U.S. and or both Europe,” Fenton said.
China’s contribution to the group’s revenue will continue to grow at double digit rates. China will also surpass the group’s stated sales growth target of 3-5 percent and income growth target of 5-7 growth.
McDonald’s competes with Yum Brands’ KFC in the United States and China, and Ajisen (China) in the mainland, a noodle restaurant chain operator.
The company said it had 1,135 stores in mainland China as of the end of 2009.
Some foreign business are feeling jittery about China since Google Inc’s high profile tussle with Beijing over censorship that led to its shutdown of its China website.
But McDonald’s, which has been in China for 20 years and is one of the most successful foreign businesses in China, does not find operational conditions on the mainland any tougher.
“China has been, in my experience, one of the easier countries to do business in,” Fenton said.
“But like any country, you do business within the laws of the land and we abide by the laws in the land. It’s certainly easier doing business today than 20 years ago.” (Reuters)