McDonald’s (MCD) plans to open 1,900 new locations in 2023. More than 400 of the new Golden Arches will be in the U.S. or in its internationally operated markets, including Germany, Canada, France, Australia, Canada, and the U.K. The remaining 1,500 will be in developmental licensee and affiliate markets, including 900 in China.
The fast-food giant plans to spend $2.2 billion to $2.4 billion on capital expenditures, “half of which will be dedicated to new net openings,” CFO and EVP Ian Borden said on a call with investors following the company’s Q4 earnings results.
“Overall, we anticipate over 4% unit growth from about 1,500 net restaurant additions in 2023. We expect this will contribute, along with restaurants opened in 2022, nearly 1.5% to systemwide sales growth,” he added.
The growth strategy marks the first time since 2014 that McDonald’s has made a big push into growing its U.S. locations. But BTIG Managing Director Peter Saleh said he expects U.S. store openings to be a very small portion of the new stores.
“The growth in the U.S. is still going to be rather nominal. At best, I think they’re going to open about 100 stores, [then, those] that are closed, maybe another 80 get to about a net number of about 20.”
Saleh said the chain’s growth strategy is welcome news to U.S. franchisee owners. Franchise owners make up roughly 95% of McDonald’s total portfolio.
“From our conversations with franchisees, they’ve been telling us, ‘Yes … We need more stores, because the volumes in the stores that we have, has grown so much that we need to offset it with with additional units’.” In Q4 2022, U.S. same-store sales were up 10.3%, compared to 7.5% in the same quarter of 2021.
Why now is the right time to expand growth, CEO explains
Despite ongoing concerns over inflation’s impact on construction and development costs, CEO Chris Kempczinski believes now is right time to boost growth, with global same-store sales up over 12%.
“We have to walk and chew gum” when it comes to unit growth and comparable sales growth, Kempczinski said on the call. “It’s not one or the other; it’s the two of them in combination…[when] you want to be growing units is when you got strong comparable sales, because that reflects the underlying health of the business.”
Taking a jab at competitors, Kempczinski added, “I am always very leery when I see some someone out there putting a strong unit growth number without those strong comparable sales because that’s historically not been a good recipe in our industry.”
This growth plan comes following the addition of a fourth “D,” which stands for “restaurant development,” to its updated Accelerating the Arches strategic plan, MCDD, now in 2.0.
Brooke DiPalma is a reporter for Yahoo Finance. Follow her on Twitter at @BrookeDiPalma or email her at firstname.lastname@example.org.
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