McDonald’s Corporation (MCD), the world’s largest hamburger chain, plans to increase its restaurant count in China to more than 2,000 by 2013. China is one of the company’s fastest growing markets.
McDonald’s also plans to open 150 to 175 restaurants in China in fiscal year 2010. At the end of fiscal year 2009, the company operated 1,137 restaurants in China.
McDonald’s opened its first restaurant in Shenzhen, China in 1990. The company faces stiff competition in mainland China from Yum! Brands Inc. (YUM), which at the end of fiscal year 2009 operated 2,872 KFC outlets.
The company perceives China to be the growth driver of Asia, Middle East and Africa (APMEA) segment. Comparable sales in APMEA soared 10.5% in February (versus a 0.7% rise last year for the comparable month) buoyed by robust performance in Japan, China and Australia. McDonald’s plans to open 520 new outlets in the region in fiscal 2010.
We think the stock provides relative safety and moderate growth prospects being exposed to faster growing international markets. However, the economic headwind which has affected consumers’ disposable income, and the intense competition among fast-casual restaurants to woo consumers, remain concerns. McDonald’s currently operates more than 32,000 restaurants. China is one of the company’s fastest growing markets.
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