McDonald’s opens a new front in the battle for dominance in China’s vast and highly opportune coffee shop market with significant investment in its McCafé concept
A McDonald's restaurant and McCafé coffee shop in Beijing | Credit: McDonald's China
McDonald’s China has announced it will invest 2.5 billion yuan (US$381m) to grow its McCafé concept across more than 4,000 locations in the East Asian nation. In a press release, the US-based fast-food chain said it would ‘accelerate the deployment’ of its McCafé coffee shop concept in key territories including Beijing, Shanghai, Guangzhou and Shenzhen, as well as focusing the cities of Nanjing, Hangzhou, Fuzhou, Xiamen, Tianjin, Chengdu and Suzhou during 2021.
"The Chinese coffee market is booming. Consumers understand coffee better and like coffee more,” said McDonald’s China CEO Zhang Jiayin in a translated press statement. “In the future, we will develop new stores, upgrade equipment, and staff,” she added.
Traditionally a nation of tea drinkers, Chinese consumers have embraced coffee and café culture in recent years, presenting a lucrative opportunity for international brands and a growing domestic segment. McCafé’s expansion plans mean competition is likely to heat up with market leader, Starbucks
, which has more than 4,700 stores in China, and troubled domestic café chain, Luckin Coffe
e, which operates around 4,200 sites.
UK-based Costa Coffee
and Canada's Tim Hortons are also investing heavily in China, while Italian coffee roaster, Lavazza
, unveiled a premium boutique coffee shop concept in Shanghai in May 2020.
By blending its traditionally value-focused proposition with more premium products, such as 100% Arabica and origin-orientated coffee varieties, McCafé will be seeking to attract China’s increasingly savvy coffee consumers.
Like its major competitors, McCafé said it would continue to develop an omni-channel presence in China, offering traditional counter service alongside mobile ordering and digital delivery platforms. Starbucks currently offers digitally-integrated ordering via a partnership with e-commerce giant Alibaba, while Luckin Coffee utilises China’s WeChat and Alipay platforms.
Despite the challenges presented by Covid-19 in 2020, China continues to be a hub for growth and innovation in the vast East Asian coffee market. World Coffee Portal data
shows Chinese coffee consumers have high levels of engagement with coffee shop apps and self-service machines, with more than 80% indicating they have previously ordered coffee for delivery – far higher rates of adoption than in the US and Europe.