McDonald’s eyes record global expansion in coming years, with more focus on delivery

McDonald’s is expecting to go through a growth spurt.

The Chicago-based burger giant wants to establish thousands of new locations around the globe in the next few years, aiming to have 50,000 locations operating by 2027.

That’s up roughly 25 per cent from more than 40,000 McDonald’s locations in operation today. The company says its anticipated expansion would represent the chain’s fastest-ever period of growth.

A super-sized footprint isn’t the only way the fast-food chain intends to grow its business, though — as McDonald’s intends to use a combination of technology and a greater focus on its delivery capabilities to better serve customers in the years ahead.

More stores in Canada?

Canada, which is already home to more than 1,400 McDonald’s restaurants, will be among the markets to see new stores in the proposed expansion effort, according to The Associated Press.

The company declined to share details on its Canadian expansion plans, but it pointed to recent comments to investors by Jill McDonald, president of the chain’s wholly owned international operated markets.

“Canada is one of my top markets,” she recently told investors. “Looking at the shift in some of the population that’s going on, we definitely see significant opportunities for growth in Canada, across the country.”

McDonald’s is also aiming to open 900 new stores in the United States and another 1,900 in international markets where company-operated and franchised restaurants are located — including in Canada, Australia, Germany and the United Kingdom.

Anil Verma, a professor emeritus of industrial relations and human resources management at the University of Toronto’s Rotman School of Management, said finding enough people to serve Canadian customers likely won’t be an issue for the fast-food giant, especially in the near term.

“For the next five years … Canada will have a steady supply of immigrant labour,” Verma said in a phone interview with CBC News.

Some of the next wave of Canada’s newest workers will be looking for this type of employment, he said.

McDonald’s also plans on establishing some 7,000 new locations in what it calls international developmental licensed markets, which are operated by licensees. More than half of them will be established in China, according to CFO Ian Borden.

Verma said there’s ample labour available for McDonald’s in emerging economies such as India and Brazil, both of which are part of the same group of international markets.

More focus on delivery

Delivery is an increasingly important aspect of the company’s business, with global sales exceeding $16 billion US, up from $1 billion just six years ago.

That’s prompting the company to put more focus on how its restaurant locations deliver.

Yann Cornil, an associate professor of marketing and behavioural science at the University of British Columbia’s Sauder School of Business in Vancouver, said he sees demand for delivery as a strong and ongoing trend that McDonald’s has picked up on.

“The pandemic has largely accelerated this trend, but it was already present before. We can see how much actors, like Uber Eats, Grubhub or Doordash have grown, as an illustration of the home delivery trend,” Cornil said, when discussing the McDonald’s expansion news via email.

“As a consequence, McDonald’s is adapting its business model,” Cornil said, adding that home delivery orders provide companies with substantial information about their customers, which can be harvested for business purposes.

Anthony Goerzen, the Sobey Professor of International Business at the Smith School of Business at Queen’s University in Kingston, Ont., said McDonald’s is recognizably skilled at finding the right place to put its restaurants so customers visit frequently.

He said he believes some McDonald’s executives would actually view real estate as their main business, with hamburgers being “a byproduct.”

“To escalate the delivery piece would suggest that food is becoming more important in their business model,” he said via email.

“The challenge is to find these new locations that are friendlier to pick-up/delivery drivers given that any change to an established, successful strategy puts the firm back on the steeper part of the learning curve.”

Yet McDonald’s president and CEO Chris Kempczinski has signalled that the company is thinking of both dine-in and delivery-minded customers with the coming changes, which he said will also see new restaurants equipped with dedicated pickup areas for delivery drivers.

“Not everybody wants delivery every single meal. Sometimes they want to go to the restaurant with their family,” Kempczinski told The Associated Press in an interview.

The CEO said he’s not concerned about cannibalizing sales from existing McDonald’s locations. In the U.S., he said, population shifts have left many parts of the country underserved. McDonald’s also wants to prevent competitors from snatching up good real estate, he said.

More technology

In announcing its expansion plans, McDonald’s also pointed to a “strategic partnership” it has established with Google, to apply various types of hardware and technology — including AI — to its business operations.

The University of Toronto’s Verma said the company’s embrace of technology will affect how many people it employs, how it operates its restaurants and the delivery side of its business.

Verma predicts automation and technology will mean a need for fewer workers at restaurants than is the case today — and that could limit the impact of labour costs, even if wages go up.

Within the broader labour market, Verma said, “we are on the cusp of a transformational change that we only see once in a generation,” whereby the impact of new technology will have a “huge impact” on how business gets done — including in the fast food industry.