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McDonald’s challenges Starbucks’ for China coffee crown

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The fast-food giant McDonalds will spend around $381 million over the period of the next three years on the expansion of its store of McCafes in China, which would challenge its rival Starbucks and KFC, as the demand for premium drinks is increasing in China.

The fast-food giant McDonalds is aiming to have around 4000 McCafe’s in China by the end of 2023, they made this announcement earlier this week.

The first McCafe was opened in China in 2009, but now they are aiming for the big cities. As Mcdonalds has passed a milestone of 1000 McCafe’s in China in May this year and the fast-food chain is expecting to reach around 1500 stores nationwide by the end of this year.

This idea of opening McCafe’s is that China’s middle class is growing and the demanding coffee and premium drinks are also increasing as they provide a substitute for the teas they drink.

According to the data from Frost and Sullivan the market is predicted to triple by 2023 as it stands at 56.9 billion yuan and is expected to multiply in the upcoming year to 180.6 billion yuan in 2023. In the upcoming year, the number of coffee cups consumed by the people of China is expected to double. The report also pointed out that the coffee consumption of China is 1.6% of the USA market.

As China’s coffee market grows with speed, the customers are expected to understand more about coffee and fall in love with it.

Right now Mcdonalds has around 3600 restaurants in China, less than half of them have McCafe that have their own counters and seating in the stores. The coffee at the stores cost around 20 yuan, which is a market competitive price when we compare the prices with its rivals.

The cost of Starbucks coffee is around 30 yuan per cup, as the chain charging the premium price for it and hold the title of the market leader. It introduced its products in China 20 years ago and now has around 4700 stores operating in the market.

After the expansion, the homegrown rival Luckin slightly overtook Starbucks at the start of this year in terms of several stores but was indulged in a scandal in April regarding the major accounting problem. Now the Luckin has around 4000 stores in the main market.

The demand for coffee in China’s main cities still exists and the fast-food giant is aiming to take advantage of that as the demand for coffee is increasing and the middle class is also increasing mean that they are going to pay the extra buck for the coffee.