Fast food giant McDonald’s will spend RMB 2.5 billion ($381 million) over the next three years on a major expansion of its store-in-store McCafes in China, challenging rivals like Starbucks and KFC in a race to cater to a growing Chinese middle class with a taste for premium drinks, reported Caixin.
Under the plan, McDonald’s is aiming to have 4,000 McCafe’s on the Chinese mainland by the end of 2023, according to an announcement earlier this week. The build-up comes as China’s coffee market is expected to grow rapidly in the years ahead as the country’s middle class expands and more people try out the beverage as an alternative to traditional tea-based drinks.
The market is expected to triple from RMB 56.9 billion in 2018 to RMB 180.6 billion in 2023, according market data firm Frost & Sullivan provided in the 2019 IPO prospectus for local chain Luckin Coffee.
“As China’s coffee market grows with speed, consumers will understand more about coffee and fall in love with it. Today, we’re very pleased to announce the across-the-board brand-upgrade plan for McCafe,” said Phyllis Cheung, CEO of McDonald’s China. “Our goal is clear: Where there is McDonald’s, there is McCafe.”