Must-know: McDonalds’ markets
Must-know: An overview of McDonald's (Part 3 of 15)
McDonalds’ markets around the world
As mentioned in the last part of this series, McDonalds (MCD) operates in the U.S., Europe, Asia or Pacific, Middle East, and Africa (or APME), and other countries and corporate (or OCC). Since all these markets have different culture and taste preferences, a one-size fits all strategy may not necessarily work in the restaurant industry. Investors can gain exposure using to the industry through the PowerShares Dynamic Leisure and Entertainment ETF (PEJ) and the PowerShares Dynamic Food & Beverage ETF (PBJ).
McDonalds opened its first international restaurants in Canada and Puerto Rico in 1967. It has expanded into other markets swelling to a total of 119 countries in 2014. The previous chart shows the search results on Google Maps for McDonalds’ restaurants all around the world. Each red dot, which increases in number as you zoom in on a country, is a McDonalds restaurant.
U.S. market
In McDonalds’ home and the oldest market, the U.S. alone had 14,278 locations at of 2013. It has a presence in almost every state. It competes with Yum Brands (YUM), Wendy’s (WEN), and other chains. As a result, the room for growth is limited. This is evident in comparable sales, which decreased by 1% month-over-month (or MoM) as of May 31, 2014.
European market
With 7,602 stores, Europe is the largest market for company-operated restaurants and the second largest market for franchised restaurants. McDonalds has focused on adding more value and premium additions to its menu. It also launched new items such as blended-ice. McDonalds also improved efforts to provide a better customer experience by introducing self-order kiosks. MoM comparable sales for this segment were up 0.4% as of May 31, 2014.
APMEA market
McDonalds operates 9,918 stores in APMEA. This market segment is very diverse in tastes. McDonalds has been careful to customize its offerings. These include, rice burgers in Hong Kong, the McCurry and Pizza Puff in India, the shrimp patty burger and Teriyaki burgers in Japan, the Bulgogi burger in Korea, pita bread sandwiches in the Middle East, and grilled chicken sandwiches in the African market. MoM comparable sales for this segment were up 2.5% as of May 31, 2014.
OCC
All remaining countries that don’t fall in the above three segments are a part of the OCC. It has 3,631 stores.
McDonalds faces several risks because of its widespread global operations. We’ll discuss some of these risks in the next section in this series.
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