McCafé poised for major expansion in China

Ding Yining
As local consumers embrace coffee, McDonald's China will invest heavily in opening of new outlets of its café sub-brand over the next three years.
Ding Yining
McCafé poised for major expansion in China
Ti Gong

In Xuhui District in Shanghai, a McCafé store has been renovated and is unveiled on Monday to add extra foot traffic. 

McDonald's China will invest 2.5 billion yuan (US$368 million) over the next three years to upgrade the McCafé sub-brand with 4,000 outlets in the domestic market.

It will fully leverage existing McDonald's dining outlets, delivery network, supply chain capabilities and digital channels to build a strong presence in the booming coffee market.

“Chinese consumers are requesting high-quality coffee with reasonable prices and we feel well-positioned to use existing supply chain and strong brand awareness to attract coffee drinkers,” said Phyllis Cheung, McDonald's China chief executive officer.

All McDonald's restaurants in China will be updated with a dedicated coffee-making segment with new layout and refreshed McCafé brand image.

By the end of this year, all McDonald's canteens in Shanghai, Beijing, Guangzhou and Shenzhen will also be serving handmade coffee drinks and light food like croissants and desserts.

Domestic market research firm Forward Intelligence Co expects China's coffee market to grow at an average annual pace of 15 percent, and reach a size of 217 billion yuan by 2025.  

Coffee makers are vying for consumers' attention in a nation of tea drinkers as younger generations embrace coffee, alternative tea drinks and other beverages.

McCafé' aims to appeal to a larger customer base, such as young-generation coffee drinkers aged between 18 and 30 in addition to existing McDonald's frequent diners.

Most of McDonald's investment will be going into canteen upgrades and renovations of coffee-making facilities as well as marketing and promotions to enhance the foot traffic of existing quick-service restaurants.

Currently Mcdonald's and its sub-brand McCafé serve 90 million cups of coffee annually in China and the upgraded coffee offerings and light food bakeries will expand the customer base.

Nationwide, McCafé is already available in about 1,500 McDonald's stores and in Shanghai its coffee drinks have been also available for on-demand delivery since 2018.  

In 2021, McCafé will be entering seven other cities, namely Nanjing, Hangzhou, Fuzhou, Xiamen, Tianjin, Chengdu and Suzhou, with presences in almost all McDonald's restaurants.

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