Fastfood giant targets Cebu for next phase of expansion

CEBU, Philippines — McDonald’s is stepping up its expansion in Cebu and across the Philippines, betting that the country’s still-underpenetrated regional markets will fuel the next phase of growth for one of the US fast-food giant’s fastest-expanding operations worldwide.

The Philippines is now among McDonald’s top 10 markets globally by store count and ranks in its top five for growth, according to Margot Torres, managing director of McDonald’s Philippines.

The country is behind only China, Japan and Brazil among the fastest-growing markets, alongside India.

“We are not just a big market. We’re also a high-growth market,” Torres said.

The company’s strategy is particularly visible in Cebu, where McDonald’s has operated for more than three decades. Its first outlet opened on Jones Avenue in 1992 and the group now has 38 restaurants across the island province.

Two new branches — in Marigondon and Tipolo, Mandaue — have opened this year, with five more scheduled before the end of 2026. The new sites include SRP Talisay, Casamira in Guadalupe, Yati in Liloan and Compostela, as well as a relocated outlet at ICM Cebu.

The planned openings will bring McDonald’s closer to its larger national growth ambitions while strengthening its presence in the central Philippines.

Across the Visayas, the company operates about 100 restaurants, while Mindanao has roughly 75. Combined, the two regions account for only about one-fifth of McDonald’s 862-store network in the Philippines, leaving substantial room for further expansion.

“We’re very eager to expand in both regions, in the Visayas and in Mindanao,” Torres said.

Cebu’s continued growth is being accompanied by investment in the cost structure needed to support the expansion. McDonald’s has partnered with Corenergy, the retail electricity supply arm of Cebu-based Vivant Corp, to reduce and manage its energy costs as higher fuel prices and rising labor expenses put pressure on margins.

Utilities account for about 6 to 7 percent of McDonald’s sales, with electricity representing roughly 72 per cent of that spending, Torres said.

Seventeen Cebu restaurants have already shifted to Corenergy, with the program expected to expand to other parts of the Visayas and Mindanao.

The company expects savings of about 10 to 14 percent in some locations, helping it preserve the value proposition that has become central to its strategy.

That pressure is particularly acute as the fast-food chain seeks to keep entry-level meals affordable. McDonald’s has pledged to retain its P99 Sulit Busog meal and other low-priced offers aimed at price-sensitive consumers and students.

The expansion also signals a vote of confidence in the Philippine consumer market. McDonald’s is pushing deeper into regional cities and secondary growth centers even as inflation, higher energy costs and increases in wages test the economics of restaurant operations.

For Torres, controlling those costs is not simply a matter of improving margins. It is central to maintaining growth.

“We have to find other levers in the operation” to keep prices low, she said.

With Cebu and the wider Visayas still accounting for a relatively small share of the company’s Philippine network, McDonald’s appears to see the region not as a mature market but as one of its next major engines of expansion. — (FREEMAN)