McDonald’s Corp., the leading global operator of fast-food restaurants, has announced plans to expand its presence in South Korea by 25% in response to growing competition within the domestic burger industry. Simultaneously, the company remains committed to finding a strategic partner to facilitate the sale of its business in the country.
According to CEO Kim Kiwon, HanGook McDonald’s Co., the South Korean unit of the global food service giant, has set a target to operate 500 restaurants in the country by 2030. As of the end of 2022, the South Korean unit of McDonald’s had a total of 399 locations, as reported in its filing to the national financial regulator.
After successfully launching three outlets in the first half of the year and two in the previous year, the South Korean unit of McDonald’s is gearing up to open five new locations in the second half. Additionally, the company has plans to open a total of 30 restaurants by the year 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.
Kim stated that the anticipated expansion is expected to contribute to the eventual profitability of McDonald’s South Korean unit.
Despite recording a growth in sales by 14.6% to a record 994.6 billion won, the company faced an operating loss for the fourth consecutive year, with a deficit of 27.8 billion won ($21.4 million) in 2022. In the first half of this year, sales, including those from franchise stores, saw a 9.7% increase, amounting 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.
“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.”