While McDonald’s is falling behind in the international food chain competition in China, it’s expanding very fast in The Philippines. McDonald’s parent company in the Philippines, Alliance Global Group (AGI) has set a goal of having 500 McDonald’s outlets operational by the end of 2016, and has plans to double that number by 2020.
The plan is a part of AGI’s broader investment to boost its commercial and retail business with a special focus on regions outside Luzon where the rate of economic growth is increasing very fast.
Andrew Tan, the founder of AGI, stated ... “We have already laid out the foundation and made significant investments across all our business segments, both here and abroad, in order to future-proof our growth”
AIG is a leading provider of property-casualty and general insurances with more than 88 million clients in over 100 countries around the world. Since establishing in Philippines in the 1920s, they have offered comprehensive risk management products and services for Filipino consumers and corporate customers. They have also invested in a variety of international brands, including McDonald’s, and their expansion plans take advantage of the raise of the middle-income class in the country and widespread consumer demand for products and services.
AGI’s retail portfolio will grow 250% and expanded from 236,000 sqm currently to 633,000 sqm by 2020. The company is planning to grow dynamically in conjunction with the McDonald’s expansion with yearly expansion of 80,000 ~ 120,000 sqm, three times more than company’s growth during the period of 2010 to 2015.
The AGI / McDonald’s plans focus on develop McDonald’s in other provinces in the country and not focusing on Manila for future growth. These plans include boosting the local economy and developing the urban landscape and infrastructure expansion in the southern parts of the country, including the Visayas and Mindanao.
McDonald’s entered the Philippines in 1981 when George T. Yang, president of McGeorge Food Industries was awarded franchising rights McDonald’s international. The first McDonald’s store in the Philippines is located near a busy university area, the second store opened in prime commercial space near the New Frontier Theater. Since that time, McDonald’s has grown and stores are now in most major shopping centers in the city and there are stores in Cebu, the Philippines second largest city and one of the prime destinations for tourism.
Since it first opened, McDonald’s in the Philippines has introduced many product innovations such as Value Meals and Happy Meals, among its most popular consumer items. The company was also one of the first companies to provide employment opportunities for students and it established McDonald’s Charities, which has raised thousands of dollars for disadvantaged people across the country.
McDonald’s has reached more than 300 stores throughout the country that offer 24 hours dining and delivery service, online and mobile application and in-house coffee shop (McCafe). But the competition for the hearts, stomachs and wallets of Filipinos continues to be a see-saw battle between international brands such as McDonald’s, KFC – Kentucky Fried Chicken, Coffee Bean & Tea and Starbucks against home-grown brands like Jollibee, Chowking and Red Ribbon bakeries to name just a few.
There is a growing trend among both middle and upper-income Filipinos to opt for a healthier lifestyle, moving away from processed and fried foods commonly found in fast-food chains to healthy foods comprised heavily of fresh fruits, vegetables and seafood which favor juice and vegetable health food stores and boutique restaurants.
It will be interesting to see if AIG can reach its goal of 500 McDonald’s restaurants online by the end of this year and whether the company can continue its ambitious growth and expansion plans and meet its goal of 1,000 stores by 2020.
