The Chinese market was also challenging for McDonald’s in terms of real estate. McDonald’s
US site selection was calculated down to a science and emphasized the suburbs because that is
where most American families spend their time. Generally speaking, China’s inner cities were
less deteriorated than US inner cities, and McDonald’s found them to be their primary target
markets. They also decided that the best way to expand was to build groups of stores
simultaneously, thereby achieving economies of scale in construction, sourcing, training and
distribution. They also secured locations in growing areas that would become prime real estate
in the future. Similar to their experience in Russia, they were taking a risk to buy low and have
that presence when property prices start to appreciate.