McDonald's Japan to Revamp Stores, Image

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McDonald's is adding a vegetarian bagel sandwich to its menu in Japan and signing on a figure-skating star to promote its healthier message as the U.S. fast-food chain continues its turnaround after years of losses.

Eikoh Harada, the new chief executive, chairman and president of McDonald's Holdings Co. (Japan) Ltd. (search), said Thursday the burger chain will invest 22.7 billion yen ($211 million) in remodeling 500 stores this year as part of its strategy to improve customer service and its image.

The Japanese partnership with the U.S. chain, which operates about 3,700 burger stores, ran into trouble in recent years after a mad-cow disease (search) scare, which began in 2001 and drove Japanese away from beef, although McDonald's uses only Australian beef unaffected by the brain-wasting disease.

McDonald's was also battered by growing competition from cheap eateries and convenience stores in the Japanese restaurant market, estimated at 27 trillion yen ($251 billion) in annual sales.

Harada, who has gotten the Japan business back into the black for the first time in three years, said McDonald's is strengthening its breakfast menu and will have more stores open at 6:30 a.m. as of now, stores open later, at 7 a.m. or as late as 10 a.m.

The bagel with cheese, lettuce and tomato is part of the new breakfast menu. Fish sandwiches, juice and salad were also added for a healthier overall menu, according to McDonald's.

Japanese figure-skater Fumie Suguri appeared on the stage with Harada along with the Japanese version of Ronald McDonald (search), who goes by Donald here.

Harada, formerly the head of Apple Computer Inc.'s (AAPL) Japan unit, was picked to lead McDonald's Japan last year. His appointment was approved at a shareholders' meeting Wednesday.

Pat Donahue, who is stepping down as chairman, said Japan sales have risen for six straight quarters.

"We've clearly turned our business around and we're headed in a positive direction," he said.