McDonald's plans increase in investment in mainland

SHANGHAI - McDonald's Corp, the world's biggest restaurant chain, said on Tuesday that half of this year's new outlets will be drive-thrus.

The company plans to open a record 225 to 250 outlets this year, after making a commitment to increase investment by 50 percent last year, said McDonald's China Chief Executive Officer Kenneth Chan, without disclosing the financial details of the investment.

"In 2012, I will add more than 100 dessert kiosks, and operate 600 McDelivery hubs with online ordering. Around 40 percent of the new stores openings will be drive-thru," said Chan.

"Drive-thru is one of the fastest-growing businesses." After entering China by opening its first restaurant in Shenzhen in 1990, the fast-food giant has seen rapid development in the country. In 2011, McDonald's opened a record 200 new outlets in the country.

It now has more than 1,400 restaurants in 26 provinces, autonomous regions and municipalities on the Chinese mainland and aims to expand that network to more than 2,000 outlets by 2013.

McDonald's lags behind its rival Yum Brands Inc in opening outlets in China. Yum has opened about 4,500 restaurants under brands including KFC, Pizza Hut, East Dawning and the recently acquired Little Sheep.

McDonalds' fast expansion relies heavily on franchises. Besides the traditional licensing, last year, McDonald's China announced that it had issued its first developmental license in Yunnan province to a mainland business in a move to further expand its presence in the world's second-largest economy.

According to Bloomberg, the company is considering a second sale of "dim sum", or yuan-denominated, bonds in Hong Kong as one option to raise funds to expand in its third-biggest market, after the United States and Japan.

"At this stage, we are going through the various options we have right now we are able to fund our growth in China regardless (and dim sum bonds) is one of the options for sure," Bloomberg quoted Chan as saying.

McDonald's sold 3 percent notes worth 200 million yuan ($32 million) in Hong Kong in 2010, becoming the first non-financial foreign company to offer the bonds, which are due in September 2013.

Last year, Unilever PLC became the first European consumer company to sell dim sum bonds to fund its businesses in China, Bloomberg said.

"We have been in China for 22 years, and we are here to lead the industry. We don't want to be just another one in the market. We aim to be number one," said Chan.

China Daily

(China Daily 02/29/2012 page15)