McDonald’s and Yum! Brands Seek More International Exposure

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According to Reuters, fast food king McDonald’s (NYSE:MCD) and the International Olympic Committee are close to agreeing to a new eight-year sponsorship contract.  McDonald’s current contract ends after the London Olympics this year, but there seems to be little standing in the way of extending the sponsorship contract.  “The situation is positive and I don’t see any obstacle. We are very close,” IOC marketing commission chairman Gerhard Heiberg told Reuters. “We will meet in Innsbruck and finalize everything. Hopefully we will sign the contract there.”

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McDonald’s is one of many top sponsors that contribute an estimated $100 million each for every two-Games package of one winter and one summer Games.  Other sponsors include Dow Chemical Co. (NYSE:DOW), Procter & Gamble (NYSE:PG), Coca-Cola (NYSE:KO), Visa (NYSE:V) and General Electric (NYSE:GE).

Meanwhile, one of McDonald’s top competitors, Yum! Brands (NYSE:YUM), is planning on expanding its international presence by adding 100 KFC restaurants across Africa in 2012.  The company is expected to spend roughly 600 million rand ($74 million) on the expansion.  Longer-term, Yum plans on having 1,200 KFC restaurants in Africa by 2014.

South Africa is one of McDonald’s most successful expansions in international history.  McDonald’s opened its first restaurant in South Africa in 1995, and set a record by opening 30 restaurants in only 23 months.  At one point, the company opened 10 restaurants in 78 days.  In 2010, Starbucks (NASDAQ:SBUX) entered into a license partnership agreement with Emperica Marketing to distribute its coffee in South Africa to capitalize on the growing economic strength in the region.

According to the African Development Bank Group, the number of middle class Africans has tripled over the last three decades to 313 million, which represents 34 percent of the continent’s population.  The group explains, “The reasons for the increase in size and purchasing power of the African middle class include strong economic growth, and a move towards a stable, salaried job culture and away from traditional agricultural activities.”

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To contact the reporter on this story: Eric McWhinnie at staff.writers@wallstcheatsheet.com

To contact the editor responsible for this story: Damien Hoffman at editors@wallstcheatsheet.com

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