McDonald´s franchise model makes now sense - Ben Cavender

Ben Cavender

McDonald´s China is trying to sell its 2,200 stores for up to US$2 billion to third parties. A move that makes sense, says retail analyst Ben Cavender in CFO, because the number of people able to run chain stores has gone up exponentially.

CFO:

The McDonald’s brand has lost its early luster in China, with market share declining from 15.1% in 2010 to 13.8% in 2015. Cheung said McDonald’s is looking for a Chinese partner with a “deep understanding” of China’s market, rather than one that can simply bankroll new stores. 

A franchise-only model in China makes sense now because the market has matured to the point where there are more people with experience running fast-food chains and fast-casual restaurants, according to Ben Cavender, director at China Market Research Group. “There’s a stronger talent pool, and they have the capability to operate a franchise and operate it well,” he told the WSJ. ” Brands are also clamoring to try to grow into new markets, and they might not be able to do it quickly by themselves, and they need help.”

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Ben Cavender is a speaker at the China Speakers Bureau. Do you need him at your meeting or conference? Do get in touch or fill in our speakers´request form.

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McDonald´s still does not know China - Shaun Rein

McDonald´s might be in China for decades, it still has problems to adjust to the fast changing realities on the ground, says business analyst Shaun Rein to QZ.  They now decided to increase their franchises and leave the cooking to people who better know the Chinese taste, says Shaun Rein, and that seems a smart idea.

QZ:

Shaun Rein

“McDonald’s is in trouble in China because it doesn’t have the type of food or brand position that Chinese consumers want right now,” says Shaun Rein, founder of the China Market Research Group. “There’s a lot more competition from Chinese chains like Kung Fu or Japanese noodle chains like Asijen, or from western brands like Starbucks. ”

Starting in 2014, growth slowed for several quarters, based on same-store sales, in the US and in “High Growth Markets” (formerly known as Asia Pacific, Middle East, and Africa)....

The downside to franchising in China is that the company will lose control over things like intellectual property, food sourcing, and service quality. But a good local partners could help the brand revive in Asia quicker than McDonald’s can do on its own, analysts say.

“In order to reinvigorate growth it needs a new business model for the country,” says Rein. “The best way to do that is to partner with folks who might know the China market a little better,” and have more money to spend.

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Shaun Rein is a speaker at the China Speakers Bureau. Do you need him at your meeting or conference? Do get in touch or fill in our speakers´request form.

Are you looking for more branding experts at the China Speakers Bureau? Do check out this list.  

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