McDonald’s Corp., the world’s top fast-food restaurant operator, is set to increase the number of its locatons in South Korea by 25% to deal with intensifying competition in the domestic burger industry while continuing to seek a sale of the business in the country to a strategic partner.
HanGook McDonald’s Co., the global food service giant’s unit in South Korea, aims to operate 500 restaurants in the country by 2030, said CEO Kim Kiwon on Wednesday. The South Korean unit of McDonald's managed 399 locations in the country as of end-2022, according to its filing to the nation’s financial regulator.
The South Korean unit is set to open five new outlets in the second half after launching three in the first and two last year. It will open 30 restaurants in 2030.
“We will accelerate the opening of new restaurants to ramp up customer contact points,” Kim told reporters in her first public appearance since she took office in May last year.
TO FOCUS ON GROWTH
Such an expansion is expected to help McDonald’s South Korean unit turn to the black eventually, Kim said.
The company reported an operating loss for a fourth consecutive year with a shortfall of 27.8 billion won ($21.4 million) in 2022 although its sales grew 14.6% to a record 994.6 billion won. Sales including those from franchise stores in the first half of this year increased 9.7% to 623.4 billion won.
“Higher sales and investments are more essential than immediate profitability,” Kim said. “We need to cut investments in products and services for a turnaround in the near term, but that is not a long-term goal of McDonald’s. We must maintain growth by increasing stores.”
McDonald’s South Korean unit also tried to attract customers with localized menus, given growing competition in the local premium burger market.
“Value for money is important to McDonald’s, but we need a proper strategy for markets with rapid changes such as South Korea,” Kim said.
McDonald’s continues to seek a sale of the South Korean operation to a strategic partner, given the importance of the business growth.
Its talks for the sale with Dongwon Industries Co., the holding company of South Korea’s top seafood company Dongwon Group, failed earlier this year. McDonald’s South Korean unit CEO Kim Kiwon (Courtesy of McDonald's) “The sale is not only for profits,” Kim said. “We are looking for a strategic partner for the growth and development of HanGook McDonald’s.”
