McDonald's to make over China restaurants

Throughout the United States, McDonald's golden arches are a symbol of quick, cheap food.

And if the fast-food giant has its way, that will be burned into the minds of potential diners in China, where the slowing economy is seen as triggering a hunt for lower-cost eating alternatives.

A McDonald's restaurant on Manhattan's 42nd Street attracts tourists around lunchtime on Easter Monday. (MICHAEL BARRIS/CHINA DAILY)

Illinois-based McDonald's, known for its Big Mac sandwich, Egg McMuffin and Happy Meals, has started a make-over of its restaurants in cities such as Beijing, Shanghai and Guangzhou, using a local designer. The new store designs incorporate wood and brick patterns borrowed from China's dynastic era while an enhanced menu includes green tea ice cream and rice dishes.

The company has also launched an advertising blitz that focuses on Chinese dreams and will soon star LeBron James of the National Basketball Association's Miami Heat. The company also is employing locals to run its franchises in China, according to the company statement.

"This should help the company attract consumers that might otherwise be going to other restaurants," said Ben Cavender, a principal at Shanghai-based consultancy China Market Research.

McDonald's struggled initially in China because it failed to give its menu local flavor, observers said. Last year, sales at company restaurants open at least a year dropped 3.6 percent from 2012.

The company aims to capitalize as diners, tightening their belts, frequent cheaper local restaurants. A McDonald's Egg McMuffin with soy milk costs around 14 yuan ($2.25), roughly double the price of buying steamed buns and soy milk at a street-side shop, the Wall Street Journal reported.

CEO Don Thompson told investors in January that the company has emphasized value offerings in China and that "given the opportunities inherent in a growing, more prosperous middle-class, we also continue to grow through expansion in China. We opened 275 restaurants last year."

McDonald's has said it plans to open an additional 300 restaurants in China this year, adding to its nearly 2,000 in the country. Franchised outlets make up 12 percent of its restaurant base, with the goal to lift that to at least 20 percent by next year.

McDonald's China makeover-plan shows how far the company has come since its beginnings in 1955 when it offered a simple menu of burgers, fries and shakes. Today it is the world's top global food-service retailer, with more than 31,000 local restaurants serving 58 million people in more than 118 countries each day, and a menu that boasts nearly 165 items, according to company statistics.

As millions of rural Chinese move into cities, McDonald's also wants to be a social hangout.

"Our research says that in China, consumers see McDonald's as a place for gathering and socialization — and that's very different from the US consumer," Christine Xu, McDonald's China marketing chief, was quoted by Advertising Age.

Yum Brands' KFC restaurants have successfully catered to Chinese food tastes. KFC, which has about 4,600 restaurants in China, more than double the number of McDonald's, offers items such as fish ball soup, spring rolls and rice porridge to attract Chinese customers.

During its more than two decades in China, McDonald's has featured its core menu items such as Big Macs. When it added rice to the menu last year, it offered chicken or beef rice wraps, and chicken or beef rice bowls.

KFC and McDonald's, the No 1 and No 2 fast-food restaurants in China, respectively, have faced increasing competition from local chains such as Real Kung Fu, which sells steamed food, and Taiwanese fried-chicken chain Dicos. The US leaders have also faced headwinds from questions over their chicken supply and avian flu fears.