By 2027, McDonald’s hopes to have more than 8,800 locations open and 100 million new members in its loyalty club.
The goals are a part of the fast-food juggernaut’s long-term strategies to increase sales throughout its already extensive network of restaurants.
In an effort to convince investors that consumers’ appetites for its Big Macs and McNuggets are still growing despite Wall Street’s concerns about the state of the economy and the threat posed by weight-loss medications, McDonald’s revealed its new objectives ahead of its investor day on Wednesday. The burger chain is anticipated to provide more information about its strategies for retaining customers, which may include introducing a refined burger gradually and increasing its focus on chicken.
McDonald’s estimates 4% net new restaurant growth for 2024. Its expansion will account for nearly 2% of the systemwide sales growth in constant currency expected for the following year.
The company intends to increase the number of its restaurants by 4% to 5% per year after 2024. In constant currency, the new locations will add roughly 2.5% to the systemwide sales growth.
McDonald’s ambitious plans for development will result in increased capital expenditures. The company has increased its capital expenditure estimate from $2.2 billion to $2.4 billion for 2023 to $2.5 billion for 2024. Additionally, McDonald’s plans to raise its capital expenditures by $300 million to $500 million annually for the years 2025 through 2027.
By 2027, McDonald’s hopes to have 50,000 locations worldwide. As of September 30, the chain operated 41,198 locations worldwide. In contrast, Starbucks stated in November that it wants to increase the number of its cafes from the current over 38,000 to 55,000 globally by 2030.
McDonald’s intends to open 900 restaurants in the United States, 1,900 in its international operated markets segment, and about 7,000 units in its international developmental licensed markets division in order to meet its development target.
Almost half of the company’s revenue comes from its IOM division, which operates in countries like France, Canada, and Australia.
China is included in the McDonald’s IDL segment and will account for more than half of the new locations for the division. With more than 5,500 locations, McDonald’s announced in late November that it had acquired a minority stake in its China business.
Chris Kempczinski, the CEO of McDonald’s, stated, “There’s no reason why China can’t be [20,000] to 25,000 stores or restaurants — it could be the largest market for us around the world,”
According to executives, its current footprint is outdated and doesn’t reflect where consumers currently live, including the shift to the South and Southeast in the U.S.
company would accelerate new restaurant development. This is the first time the company has disclosed its new development targets.
The company’s expansion will go beyond its ambitious plan to open new flagship restaurants. It will also test 10 locations of a spinoff brand, CosMc’s, by the end of 2024. The first will open this week in Illinois.
Apart from its ambitious expansion plans, McDonald’s aims to achieve a quarter of a billion active loyalty program members by 2027. The company was still testing the loyalty program in the United States in 2020, when it held its final investor day. However, it has since become a massive phenomenon, increasing mobile sales and luring users back more often.
According to Morgan Flatley, executive vice president of new business ventures and global chief marketing officer at McDonald’s,McDonald’s is leaning into its loyalty program as marketers fear a “cookieless future,” where third-party data on its customers dries up Instead, by adding new ways to earn points like watching sports games on its app, and perks like transferring points to family and friends, McDonald’s is preparing to rely only on a trove of data it collects through its own mobile app.
“In the future, data will sit alongside restaurant locations as another significant competitive advantage,”,Joe Erlinger, the president of McDonald’s US, informed investors on Wednesday.
Additionally, McDonald’s announced a collaboration with Alphabet’s Google Cloud, leveraging the latter’s artificial intelligence to enhance operations throughout its restaurant chain.Joe Erlinger, the president of McDonald’s US, informed investors on Wednesday.
“We’re excited to see how McDonald’s will use our generative AI, cloud, and edge computing tools to improve their iconic dining experience for their employees and their customers all over the world,”,Sundar Pichai, the CEO of Alphabet, stated in a statement.