McDonalds China Strategy

Today

McDonalds Worldwide Stores

14155

2956
2223
1443 1261
 Entrance into China

First McDonalds
Opened in Shenzhen
October 8th, 1990

High-End Restaurant
Fashionable Place to Eat
Western World Mania
No-Server

Adjusted Recipe
Less Greasy
Less Sugar
Specialization

Standardized
Worldwide Menu
Very Little Localization

McWings
Prosperity Burger
Black and White Burger
 Compared to KFC
Highly Localized First Mover Advantage
Porridge, Congee Entered 3 Years Prior
Fried Chicken Taste Opened Franchise Early
5000+ Stores in China 2400+ Store in China
 Porters Five Forces

Threat of New Entrants - Strong Competitive Rivalry Medium

- Growing market attracts new competitors Threat of - Annual growth rate of 10%-20%
- Low investment barrier New - High seller concentration
Entrants - Medium product differentiation

Supplier Competitive
Supplier Power - Low Buyer Power
Power Rivalry
- Large number of suppliers
- If prices for agricultural products
rises, suppliers could gain more
bargaining power
Buyer Power - Medium
- Bargaining power of a single consumer is
Threat of weak, but it does not hold for group
Threat of Substitution - Medium Substitution consumers
- More Chinese begin to pay attention on - Low switching cost
diet health - High buyer concentration
- Fast development of rich varieties of
Chinese fast food
- Preference of western food among youth
 Weakness
Strength - Price is high compared to some other local Chinese
- Strong brand identity fast food restaurants
- Uniform product menu at every store - Specialty of McDonalds does not translate well in
China
- Advertisement

SWOT
Opportunities
- Chinas immense population
- China has an aging population, this presents
opportunities for products such as tea, coffee and
other food and drink that are popularly consumed by
middle aged citizens.
Threat
- Relative few threats in recent years, only significant
threat has been KFC.
- The largest rival of McD worldwide Burger King
entered the Chinese market in 2005.
- McD has been occasionally subject to criticisms and
protests from certain fractions and groups regarding
employment practices and health groups etc.
Market Share of Fast Food Chains in China
Wallce
KFC MCD Dicos
Others
The Revenue of KFC and MCD in China

100mil
RMB KFC MCD
Why Decline
Consumer Upgrade
E-Commerce
Food Safety Scandal
Cost Increase
Poor Localization
Sell?
Sell?
Target of Sale

Accelerating Store
Openings
Menu Innovation
Restaurant
Convenience
Retail Digitalization
Delivery Service
 2015.10 2015.10
Yum broke off its China Unit
Announced to sell china
mainland and HK
Franchise rights
2016.03
Yum announce to sell 19.9%
share of China Yum

2016.09
ANT Financial Service & Chunhua
Capital invest 50mil USD and
400mil USD to Yum China
2016.12
Deal Finalized with CITIC
and Carlyle 2016.11
Yum China got listed in NYS
Difficult Balance

st
Co
Must:
Win Back Public Support

Lo
Provide Consistent, High-Quality Experience

of
Tailor Offerings to Local Flavor

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s te
While:

Ma
Preserving the Western Appeal