Quick-Service Restaurants: Future Expansion and Innovation

Current Expansion Strategies

Quick-service restaurants are focusing on aligning strategies, leveraging financial strength, and enhancing franchisee support. McDonald's emphasizes strategic alignment and brand power, while KFC expands its SuperApp and loyalty program. Domino's highlights franchisee engagement through its 'Hungry for MORE' strategy, underscoring the critical role of franchise partners in growth.

"With our system aligned on the right strategies moving forward, along with the financial strength of our franchisees, suppliers, and the company, I remain confident that we will continue to deliver long-term growth for our system and for our shareholders. And with that, let me turn it back over to Chris." --- (MCD, earning call, 2024/Q1)

"In that vein, the KFC team is tirelessly working to give our franchisees the tools to succeed, including furthering the expansion of SuperApp and the KFC global loyalty program, which is now live in 14 markets. Now I'll discuss our relevant, easy and distinctive brands or RED for short, followed by our unrivaled culture and talent and good growth strategy." --- (YUM, earning call, 2024/Q2)

"Everything we do at Domino's is enhanced by our best-in-class franchisees. They're the E in our Hungry for MORE strategy. In early May, we hosted our largest worldwide rally with almost 9,000 franchisees and team members in attendance." --- (DPZ, earning call, 2024/Q2)

"The Company believes our Strategy builds on our inherent strengths by harnessing the Company's competitive advantages while leveraging its size, scale, agility and the power of the McDonald's brand to adapt and adjust to meet customer demands in varying economic environments, including the current industry-wide challenges associated with more discerning consumer spending." --- (MCD, sec filing, 2024/Q2)

"I know from experience, this powerful brand is not constrained by expansion opportunity, but rather its growth and success are tied closely with having the right franchise partner. This is why we are very" --- (YUM, earning call, 2024/Q2)

Franchise Models

Quick-service restaurants like McDonald's, Domino's, and KFC leverage franchise models to drive growth and innovation. McDonald's focuses on stable revenue and operational improvements, Domino's emphasizes franchisee profitability as a growth engine, and KFC's global desirability fuels rapid expansion.

"The Company's heavily franchised business model is designed to generate stable and predictable revenue, which is largely a function of franchisee sales, and resulting cash flow streams." --- (MCD, sec filing, 2024/Q1)

"way to think about it, is we focus on franchisee profitability. We feel like if the franchisees are profitable, that's the engine that grows Domino's." --- (DPZ, conference, 2024/05/30)

"As the number one brand on Entrepreneur Magazine’s Top Global Franchise rankings, KFC continues to demonstrate strong desirability among global franchisees with a new store opening every 3 hours." --- (YUM, earning call, 2024/Q1)

"One of the strengths of the franchising model is that the expertise from Company-owned and operated restaurants allows McDonald’s to improve the operations and success of all restaurants while innovations from franchisees can be tested and, when viable, efficiently implemented across relevant restaurants." --- (MCD, sec filing, 2024/Q2)

"We feel like if the franchisees are profitable, that's the engine that grows Domino's. But what we tell our franchisees is they need" --- (DPZ, conference, 2024/05/30)

Global Market Expansion

Starbucks plans to expand to Honduras and Ecuador, aiming for 55,000 stores by 2030. McDonald's will open over 2,100 restaurants globally, with significant contributions from developmental licensees. Domino's targets 5,500 stores in six global markets. These expansions highlight the aggressive global growth strategies of major quick-service restaurant chains.

"As we expand to Honduras and Ecuador, our global footprint will grow to more than 39,000 stores across 88 markets, putting us well on the path to 55,000 stores by 2030." --- (SBUX, earning call, 2024/Q2)

"Globally, the Company expects to open more than 2,100 restaurants. The Company will open about 500 restaurants in the U.S. and International Operated Markets segments, and developmental licensees and affiliates will contribute capital towards more than 1,600 restaurant openings in their respective markets." --- (MCD, sec filing, 2024/Q2)

"Despite these pressures, Yum! delivered an impressive 10% core operating profit growth, reflecting the resilience of our scale, global, multi-brand business model, increasing benefits of our digital and technology strategy and the expert management of the business by our leaders around the globe. A prime example of factors underpinning our resilience was profitability in our 488 company-owned Taco Bell stores in the US, our single largest estate of company-owned stores, representing approximately half of our total global company-owned store revenue." --- (YUM, earning call, 2024/Q2)

"Out of India, increased its total store count potential to 5,500 over the medium-term in the six global markets in which it operates." --- (DPZ, earning call, 2024/Q2)

"But I think with the weakness you're seeing in comps, it kind of begs the question of how committed you are to this kind of global rate of expansion in the 7% to 8% range for company-owned stores." --- (SBUX, earning call, 2024/Q3)

Technological Innovations in QSRs

Domino's and Pizza Hut are leveraging partnerships and digital transformations to enhance customer and store experiences, while Starbucks focuses on strategic sourcing and process improvements to drive technological advancements in the QSR sector.

"In turn, these savings will enable us to target investments that drive value for our customers beginning later in Q4, reigniting our North America flywheel for growth. We are early days on this journey, building both our strategic sourcing and revenue management capabilities." --- (SBUX, earning call, 2024/Q3)

"Working with Microsoft is to bring that innovation both to the front of the house as well as the back of the house by partnering those with tremendous know how about the Domino's customer with those with great technology know how in Microsoft that can actually partner to actually bring in better solutions both to the customer experience as well as the store experience for the team members in the stores." --- (DPZ, conference, 2024/06/10)

". @PizzaHut Global Chief Operating and Digital & Technology Officer Shannon Garcia recently sat down with @NRNonline at the Women's Foodservice Forum's annual conference to talk about digital transformation and purpose-driven leadership. https://t.co/qNb0jKxuVe" --- (YUM, twitter, 2024/05/07)

"So we're encouraged by the progress so far, but we're not nearly done. You're making a lot of process improvements and that's to come, at the same time also bringing in new product innovation into the business." --- (SBUX, conference, 2024/06/05)

"But maybe let's combine that question with tech advancements, right? And the fact that you've been pioneering the technological improvements in the restaurant space." --- (DPZ, conference, 2024/05/30)

Menu Diversification Strategies

Domino's Pizza is leveraging localized innovation and diversified pizza consumption scenarios to drive growth in China. McDonald's focuses on a simplified core menu while introducing fan favorites and new product innovations, alongside continuous menu innovation throughout the year to enhance customer satisfaction.

"of 2017, the company has achieved 26 consecutive quarters of positive same-store sales growth.Accelerating expansion of stores with excellent performance of new storesDue to growing acceptance among domestic consumers, the diversification of pizza consumption scenarios and localized innovation, the pizza market in China continued to grow." --- (DPZ, press release, 2024/04/09)

"We have a simplified menu that focuses on our core while never shying away from bringing back fan favorites at the right times or pursuing the right new product innovations.We have built one of the largest loyalty programs in the industry and we're continuing to lead with a long-term mindset, making decisions that meet our customers where they are and where they need us right down, while also plotting a path for sustained success.And now I'll turn it over to Ian." --- (MCD, earning call, 2024/Q2)

"All of those things in combination are improving customer satisfaction. We're seeing our satisfaction scores increase in the U.S. And then we will, of course, have menu innovation that happens throughout the year." --- (MCD, earning call, 2024/Q1)

Sustainability Initiatives

Quick-service restaurants are increasingly integrating sustainability into their core strategies. Yum! Brands emphasizes a comprehensive sustainability agenda, while McDonald's focuses on sustainable, profitable changes. Starbucks highlights sustainable growth for stakeholder value, and Pizza Hut integrates eco-practices into its brand strategy, underscoring sustainability as a business imperative.

"Our global citizenship and sustainability strategy is reflected in our Good agenda, which includes our priorities for social responsibility, risk management and sustainable stewardship of our people, food and planet." --- (YUM, sec filing, 2024/Q2)

"And there is a lot of, I think, strength within our system, financial strength within our system to implement the necessary changes, but they have to be sustainable for us." --- (MCD, earning call, 2024/Q2)

"And we create value across all of our stakeholders as we grow sustainably. And that's incredibly important." --- (SBUX, conference, 2024/06/05)

"As @PizzaHut’s Sr. Manager of Sustainability, Emily True integrates eco-practices into brand strategy, proving sustainability is a business imperative for a better planet." --- (YUM, twitter, 2024/05/30)

"So we want to get to the right outcomes and do that on a way in a way that it's going to be sustainable and profitable for both our operators and for McDonald's." --- (MCD, earning call, 2024/Q2)

Customer Experience Enhancements

Starbucks and Domino's are enhancing digital experiences and operational efficiencies to improve customer satisfaction, while McDonald's is investing in technology to transform customer interactions, despite potential risks.

"We believe these enhancements to the digital experience, coupled with more effortless ordering will continue to drive Starbucks Rewards membership over time with customers increasing frequency and spend." --- (SBUX, earning call, 2024/Q3)

"And we'll be rolling it out as we go into 'twenty five and beyond. And I think that is going to be significant and improved significantly improved experience for the customer." --- (DPZ, conference, 2024/06/10)

"Our investments to transform and enhance the customer experience, including through technology, may not generate the expected results." --- (MCD, sec filing, 2024/Q1)

"Our focus on operational excellence, driven by a reinvention plan has led to a multi-second year-over-year improvement in out-of-the-window times, a nearly 50% reduction in calls received via customer contact center for my order took too long and Mobile Order & Pay and delivery uptime rates of 99%.These are key indicators of our work to drive growth by addressing customer wait times, product availability and the customer experience." --- (SBUX, earning call, 2024/Q3)

"And I think this one that we've just launched in September of 2023 has a significant enhancements, especially for the carryout customer." --- (DPZ, conference, 2024/06/10)

Competitive Landscape and Positioning

Domino's and McDonald's are strategically positioning themselves in the competitive quick-service restaurant landscape by leveraging pricing strategies, sharpening offers, and aligning with evolving consumer demands. Both companies are focused on maintaining momentum and adapting to a value-focused environment to stay competitive.

"So, sorry, to get really excited about that. No, no, no. I mean clearly it's a great topic of conversation and it seems like you're deploying some extra levers for Domino's to be able to be well positioned in an increasing competitive environment." --- (DPZ, conference, 2024/05/30)

"And that we're positioned to accelerate our momentum as this challenging environment begins to turn in each and one of our markets as we look forward." --- (MCD, earning call, 2024/Q2)

"brand is positioned to compete? And what arguably is going to be a more value focused competitive environment moving forward?" --- (DPZ, conference, 2024/06/10)

"I think part of it's just been the landscape in the consumer is evolving and those platforms and offers have needed to be sharpened and I think better positioned to be delivering in the current context." --- (MCD, earning call, 2024/Q2)

"And as long as we're doing that, we're aligning competitively with the local competition through our pricing there." --- (DPZ, earning call, 2024/Q1)