McDonald's to Double Stores in South Korea

OAK BROOK, Ill. ( TheStreet) -- McDonald's ( MCD) plans to double its presence in South Korea by 2015.

McDonald's Korea CEO Sean Newton said the goal of the $449 million investment will be to open 243 new McDonald's restaurants by 2015, the majority of which will be franchised, and 80% of which will feature drive-thru windows.
McDonalds

The announcement came during a press conference in central Seoul, as reported by Korea Joongang Daily.

That would bring McDonald's total presence in South Korea to around 500 restaurants.

"Many global companies have focused on other emerging markets, but Korea is one of the five top priority markets for McDonald's," Newton said. "Korea is economically advanced, yet penetration of quick-service restaurants is less than one-third of the rate in countries such as France or England."

Newton said that McDonald's South Korea unit booked double-digit revenue growth last year, the fifth straight year of double-digit sales gains.

McDonald's Korea, originally a joint venture established in 1988, was bought out by the U.S. based parent company in 2006. Since then, delivery service and 24-hour restaurants have become available at some locations in the country. Food preparation systems implemented at McDonald's Korea locations allow employees to complete customer orders in less than one minute.

Newton said it was not the intention of McDonald's Korea to outshine local fast-food chain Lotteria, a unit of Japan's privately held Lotte Holdings. Lotteria has nearly 900 locations in Korea.

"Our goal is not to be bigger than Lotteria but to develop a successful McDonald's market," Newton said. "We will grow not by stealing market share, but by growing the market."

South Korea is just one emerging market where McDonald's intends to expand its footprint.

McDonald's said in December it plans to open 200 stores in China, growing its presence in the region by 40% over the next couple of years.

The Golden Arches said its investment will include opening new restaurants and updating existing stores. Among the new store openings, about half will be drive-through locations, McDonald's said.

Fast food peer Yum! Brands ( YUM) said recently it grew earnings-per-share by 13% over the past ten years, crediting the growth to aggressive expansion in China and other emerging markets, opening an average of nearly four new restaurants outside the U.S. each day.

Yum!'s chief of India operations said in November he expects revenue to grow between 35% and 45% in 2011. Comparable same-store sales, or sales at stores open at least one year -- a closely watched metric in the restaurant industry -- should increase in the mid-teen percentages, Niren Chaudhary told Reuters at the World Economic Forum's India summit.

"So 2011 is going to be a transformational year in which I personally expect that we will beat all of the metrics of 2010. So we will grow faster, we will build more stores and hopefully get more recognition for the brand," he said.

U.S.-based coffee shop giant Starbucks ( SBUX) has also been looking overseas for growth.

Starbucks said last week it plans to expand in India, according to an alliance with Tata Coffee, announced in mid-January.

Under the terms of the deal the pair will collaborate on sourcing and roasting green coffee beans in Tata Coffee's Coorg, India-based facility, as well as jointly exploring "the development of Starbucks retail stores in associated retail outlets and hotels."

"This memorandum of understanding is the first step in our entry to India," Schultz said. "We are focused on exploring local sourcing and roasting opportunities with the thousands of coffee farmers within the Tata ecosystem. We believe India can be an important source for coffee in the domestic market, as well as across the many regions globally where Starbucks has operations."

Starbucks also said recently it plans to grow its presence in China by 40% this year, opening 200 new stores in the country over the next three years. In November Starbucks said it plans to open 500 stores this fiscal year, 400 of which will be outside the U.S.

As in India, Starbucks also plans to grow coffee beans in China.

All its plans for international expansion led analysts from UBS to lift their price target on Starbucks shares, citing its global growth prospects.

-- Written by Miriam Marcus Reimer in New York.

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