McDonald’s Corporation (MCD) Looks At Europe And Asia For Growth

McDonald’s Corporation (NYSE:MCD) is for the first time in more than 40 years feeling the full effects of competition in the fast food business. Sales have been on the decline for the past five years especially in the US. Reports that the fast food chain could close up to 700 outlets this year shows how dire the situation has become.

More Closures Expected

It is not a surprise that closures are outpacing the opening up of new joints as food safety concerns and competition continues to weigh in on the company’s dominance of the space. McDonald’s Corporation (NYSE:MCD) runs more than 36,000 restaurants in the US, but the number is set to shrink as closures become the order of the day.

The biggest challenge that McDonald’s Corporation (NYSE:MCD) continues to face is the changing attitude of US consumers as most of them resort to healthy eating habits. Customers are slowly personalizing their eating habits with a focus on relevant local ingredients. Unlike in the past where fast food joints were the go to places, most consumers have resorted to taking their meals in contemporary inviting atmosphere.

Overseas Expansion drive

McDonald’s Corporation (NYSE:MCD) market share has been shrinking in the US eliciting suggestions that the company may be forced to seek growth overseas. Europe and Asia have turned out to be a key marketplace that the company is targeting with the opening up of hundreds of new restaurants.

France is already offering exciting opportunities for growth, McDonald’s Corporation (NYSE:MCD) having already opened 1,200 locations. The company is planning to invest an additional 200 million Euros on an expansion drive. Franchises in France are turning out to be far much superior to those in the US in terms of returns, having been filled with high-end offerings like McCafe and bleu cheese burger.

Scaling of new ideas in the US has always been a challenge for McDonald’s Corporation (NYSE:MCD) considering the fleet of its stores. Competition overseas is minimal and another reason the company needs to pursue growth opportunities away from the US.

Viraj Shah

Viraj Shah has completed M.Com (Finance) and is currently pursuing his CFP. He tracks US markets along with other global markets like India very closely. He is very passionate about stocks, real estate, and technology. He also believes that money can always be made in the market.

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