McDonald’s CEO Says Chain Wants to Do Business With Africa

McDonald's

The Golden Arches are ubiquitous, and now McDonald’s (NYSE:MCD) wants to expand its presence into Africa. According to Bloomberg, Chief Executive Officer Don Thompson shared in an interview Monday that the company is looking at potential new markets in Africa. Africa is part of the fast-food chain’s future growth strategy, and after entering a new Southeast Asian country for the first time in more than two decades, the company is ready to further expand in a number of new nations in Africa.

Thompson explained via Bloomberg that, ”We’re looking at the opportunities that Africa may yield. We’re in ongoing dialogue to build appropriate relationships. There’s quite a few countries across Africa we want to look at, but Nigeria clearly is a large country that has opportunity.”

While McDonald’s is struggling to sustain its business in the U.S. and Europe, the company is also focusing on its expansion efforts in developing nations. McDonald’s recognizes that these new markets present opportunities for reaping success with its fast and cheap fare, and thanks to its worldwide reputation, the company doesn’t have to worry about getting the word out about its locations on foreign ground. In addition, McDonald’s (hopefully) soon-to-be consumers already know something about fast food thanks to the company’s rival, Burger King (NYSE:BKW). According to Bloomberglast year, Burger King opened its first restaurant in South Africa and said that it would look to open outlets in Botswana, Mauritius, Mozambique, Namibia, Zambia, and Zimbabwe.

McDonald’s also opened its first 350-seat branch in Vietnam last week, marking the first time the company entered a new Southeast Asian country for the first time in more than two decades. The company opened a restaurant in Brunei in 1992. According to Bloomberg, in Africa, McDonald’s has outlets in Egypt, Mauritius, Morocco, and South Africa. There are 29 Burger King branches in Vietnam.

Africa is especially appealing to both McDonald’s and Burger King because the continent is home to the world’s youngest and fastest-growing population. Estimated household expenditure in Africa is expected to expand to $1.4 trillion a year by 2020, according to a 2010 McKinsey & Co. report. Expanding middle classes often help food companies and retailers appeal to cost-conscious consumers who value good quality as well as reasonable prices.

McDonald’s specifically has a close eye on Nigeria because, as reported by Bloomberg, Nigeria’s economy has expanded an average of 8.2 percent annually since 1999, and the West African nation has a population of about 170 million people, the most on the continent. McDonald’s would like nothing more than to serve than 170 million people — the question now is merely when, but the International Monetary Fund says that Sub-Saharan Africa’s economy will expand 6.1 percent this year, so it is likely that McDonald’s will confirm its plans sooner rather than later.

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