By Kim Tae-gyu
McDonald’s is poised to invest a total of 500 billion won ($436.4 million) over the next five years to more than double the number of its restaurants in Korea from 243 to 500.
McDonald’s Korea Managing Director Sean Newton announced the ambitious plan Monday, which he says will enable the firm to strengthen its footing in the potential-laden domestic market.
``When you compare Korea to our other markets, you can see that we have a lot of opportunity here. Our penetration so far is less than one third of our other markets,’’ Newton told a press conference.
``And because of this opportunity and the tremendous results that we have achieved over the last five years, McDonald’s global believes in this market and wants to invest over 500 billion won by 2015 and grow to over 500 restaurants.’’
McDonald’s Korea has chalked up fast growth in recent years by introducing a set of innovative ideas including 24-hour opening, home delivery and customized breakfast menus faster than its rivals.
The company has racked up double-digit growth for five straight years through 2010 when the Seoul-based outfit recorded a 14.3-percent rise in annual turnover from the previous year.
However, it has lagged behind as far as the number of restaurants is concerned compared to homegrown brands although its sales put it among the top players.
The reason: The fast food giant has employed a unique strategy of managing the stores itself. As a result, less than a dozen franchisee contractors operate McDonald’s restaurants across the country.
Newton, who took charge of McDonald’s Korea early last year, vowed to change the outfit’s strategy.
``At the center of our growth is our plan to increase the number of franchisee restaurants. In other successful global markets, currently, 60 percent of our restaurants worldwide are operated by franchisees,’’ the 43-year-old said.
``In Korea, we will put this model into place. By 2015, approximately 40 percent of our restaurants will be run by franchisees business partners.’’
This means that up to 200 restaurants would be run under the franchise contracts by 2015, around 20 times more than now.
The other two major tactics adopted under the five-year plan are to reimage its existing restaurants and to take advantage of its conventional competitive edge, the Drive-Thru.
McDonald’s looks to refurbish all of its restaurants with contemporary, comfortable designs by 2013 as well as install Drive-Thru services at four fifths of its newly-launched ones.
Newton noted that the three policies of increased franchisee contracts, Drive-Thrus and the refurbishment of restaurants will act as three pillars buttressing the future of McDonald’s Korea in line with the firm’s ``three-legged stool’’ philosophy.
``Ray Kroc, the founder of McDonald’s, established this philosophy, which refers to the three components that advance McDonald’s business ― franchisees, who own and operate McDonald’s restaurants, our suppliers and McDonald’s employees.’’