McDonald's, the flagship U.S. fast-food chain, is moving ahead with a large-scale expansion strategy. In particular, it is targeting areas where populations are surging, such as outer-ring U.S. cities, aiming to add stores to fill growth gaps.
According to Bloomberg on the 1st (local time), McDonald's is recently pushing to expand its brick-and-mortar footprint by targeting regions with relatively few stores per capita. After a period of trimming locations, the move appears aimed at winning back customers who had defected to Mexican chain Chipotle and burger chain Shake Shack.
McDonald's plans to add about 10,000 stores over the next four years, reaching 50,000 locations worldwide. It is seen as an aggressive push to catch Chinese bubble tea and ice cream brand "Mixue," which currently ranks No. 1 by global store count among food chains. McDonald's Chief Development Officer (CDO) Tabassum Zalotrawala said, "Store growth hasn't kept pace with population growth," adding, "There are still new growth opportunities across the United States."
McDonald's core selling point is "convenience." The company is pursuing a so-called "five-minute living zone," placing restaurants at high-traffic nodes so customers can reach a McDonald's within a five-minute drive from anywhere. To that end, headquarters is strengthening drive-thru and mobile ordering systems, and inside stores it is focusing on boosting convenience by installing kiosks and setting aside delivery-only areas.
Previously, McDonald's worked to defend sales through price hikes, menu adjustments, and mobile app improvements, but results were limited. Last year, same-store sales growth in the United States hit a 10-year low, and McDonald's shares at one point fell more than 2%. Considering that the S&P 500 rose 23% over the same period, it was a lackluster report card.
In response, McDonald's appears to be seeking a breakthrough through so-called "volume expansion" by increasing the number of outlets. In particular, the company has designated Texas—which has added about 2 million people since 2020—as a core market and is aggressively growing its footprint there. A quarter of new stores are slated for Texas, and about 40 have reportedly opened in Dallas and Fort Worth alone. Texas is cited as a region with relatively low average living costs and a business-friendly environment that continues to draw immigrants from overseas.
McDonald's strategy can also be seen in the case of Celina, a small city north of Dallas, Texas. Celina was a small rural area of about 17,000 people five years ago, but its population has since grown to 65,000, and it is building out various infrastructure. McDonald's has opened two restaurants in the area and is pursuing similar expansions in other places where populations are on the rise.
However, experts warn that McDonald's expansion into small cities could backfire by misaligning with local demand and tarnishing the brand image. Residents who prefer the pastoral character unique to small towns may welcome independent restaurants over large franchises.
New stores in small cities typically see fewer visitors than existing locations, but performance usually stabilizes within two to three years, according to industry sources. In real estate circles, a McDonald's entry is viewed as a kind of "first-mover" signal, as it often precedes a flurry of openings by big-box chains such as Walmart, Home Depot, and Costco. The CDO explained, "The greater the accessibility, the more frequent the visits, and that translates directly into profitability," suggesting McDonald's will continue to expand accessibility for the time being.