McDonald’s Corporation (NYSE:MCD) has consistently shown its leadership savvy in maximizing profits by moving abroad to do business, and that effort has been rewarded with buckets of money. Well, maybe not literally buckets, but a lot of money. And nearly $7 billion cash on hand will help its efforts to expand internationally.
The company started its expansion project outside of North America in 1967, when it opened up shop in Puerto Rico, and it hasn’t looked back since. With continuing Westernization throughout the world, McDonald’s Corporation (NYSE:MCD) growth potential seems limitless. The restaurant chain has opened nearly 3,600 locations in Japan alone, but that doesn’t mean there isn’t more room for world domination.
Those who are bearish on McDonald’s say the company is faced with increased competition in the market. But with a stranglehold already in North America, and McDonald’s leading the way with new, healthier menu ideas, the firm will rise above those competitors internationally, just as it has in the past.
McDonald’s Corporation (NYSE:MCD) doesn’t appear to be planning slow growth. In fact, the firm invested more than $2 billion to new stores this year to increase its restaurants throughout the world, which currently number about 34,000.
Analysts expect McDonald’s to grow revenue by 2.5% this year and over 5% next year. That will help fuel an EPS bump. That category is expected to increase by 5% this year and 9% next year. It looks like analysts agree with me, and the restaurant chain will see happy days thanks to its international efforts.
Other firms are spending big at international expansion
Starbucks opening up shop
Starbucks Corporation (NASDAQ:SBUX) announced about three months ago that it will open 100 new coffee shops in the Philippines and 100 in Indonesia over the next three-to-four years. On June 26, it added to that expansion plan when it said another 100 locations would be opened in Malaysia. That motivation reminds me of a young McDonald’s.
The expansion shows that Starbucks Corporation (NASDAQ:SBUX)’ current efforts overseas have been successful, in an area that once didn’t have much of a desire for coffee. Part of that expansion includes China, which is mostly known as being a nation full of tea drinkers.
Starbucks Corporation (NASDAQ:SBUX) has proven the bears wrong, by being able to profit in China — where it costs about 15% to 20% of a daily wage to buy a latte. In the United States, it costs about 2.5% of a daily wage to purchase the drink. However, about 13 million people in China are part of the upper class, which is enough people to stimulate the market. Starbucks Corporation (NASDAQ:SBUX) has dedicated $1.2 billion this year to further global expansion.