McDonalds unveils new US$382m investment plan to tap into growing Chinese coffee market

CHINA – American fast food company, McDonalds is planning to invest over US$380 million in China’s coffee industry to take advantage of the growing consumption of the beverage in the Asia’s largest economy.

The investment to be implemented over a course of three years will be made by its coffee brand McCafé.

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FoodBev reported that McCafé will channel investment towards the establishment of new coffee shops inside McDonald’s restaurants across China to meet the country’s growing demand for coffee.

By 2023, McDonald’s expects to run more than 4,000 McCafé outlets on the Chinese mainland.

Phyllis Cheung, CEO of McDonald’s China, says that part of the capital will be used to upgrade equipment, marketing and staff training.

As part of the investment, the fast food chain aims to open coffee shops in Beijing, Shanghai, Guangzhou and Shenzhen by the end of the year.

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This will be followed by an expansion of its business in seven other cities including Nanjing, Hangzhou and Xiamen. 

McDonald’s first entered the Chinese mainland market in 1990 and currently operates more than 3,600 restaurants across the country, making it the fast food chain’s second largest market in the world.

The expansion drive follows an earlier announcement by CITIC- a majority shareholder in MacDonalds China- that it planned to sale a 22% stake in the company with an aim to raise at least 2.17 billion yuan ($312 million) through the sale.

CITIC Ltd said the transaction is purely a “commercial decision” and it will continue to work for the development of McDonald’s business in China along with its partners.

Sources close to the deal had then told Reuters that CITIC Capital, the group’s flagship alternative investment arm which manages over $26 billion in assets, would likely become the buyer.

Earlier this year, following the eruption of the pandemic, MacDonalds China was forced to apologise after a branch in the industrial city of Guangzhou barred black people from entering.

McDonald’s responded by saying that when it found out about the notice it temporarily closed the restaurant.

The restaurant added that it had conducted “diversity and inclusion” training in the branch to prevent such cases from occurring in future.

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