McDonald's Opening Drive-Thru Windows in China

McDonald's Corp., (MCD) the world's largest fast food chain, is rolling out its drive-through windows in China, reaching out to a generation of newly mobile Chinese in a bid to move sales back into the fast lane.

Relying on the windows and other expansion and marketing plans, the U.S. company expects its China sales to return to a growth track this year after a flat performance in 2005, its Greater China president said on Thursday.

McDonald's, which vies with Yum Brands Inc.'s (YUM) KFC in China, opened 101 outlets in the market last year and is on course to boost its count to 1,000 by 2008 from 730 at present, Guy Russo told Reuters on the sidelines of an event marking the opening of its first Shanghai drive-through outlet.

The restaurant, located in the city's Waigaoqiao Free Trade Zone, is McDonald's second drive-through in China, bringing a concept first introduced in the United States in 1975 to its fastest growing foreign market.

"We were kind of flat last year in mainland China, but we are expecting good positive growth this year," said Russo, adding that the company is already seeing growth in January. He said it was still too early to comment on specific growth targets, but said he hoped it would be in the double digits.

China was one of McDonald's best prospects before last year's slowdown, which came amid a broader malaise that saw its global third-quarter earnings drop 6 percent. Russo would not comment on the reason for last year's slow sales, but Yum earlier reported a 1 percent drop in November China sales due to public concerns over bird flu. McDonald's China menu also relies more heavily on chicken than in other markets, reflecting a local preference for poultry over its more traditional burger-heavy offerings.


McDonald's is making its foray into China's drive-through market to tap into an increasingly mobile market where car sales reached some 2.9 million last year alone.

In a nod to the growth of high-tech in a market where Internet users now number 100 million, the new two-story Shanghai drive-through restaurant also features a special area where customer can surf the Web for free.

McDonald's opened its first China drive-through last month in the southern city of Dongguan near Hong Kong. Daily turnover there now outpaces the company's national average, said Jeffrey Schwartz, the company's chief executive officer in China.

The company's third drive-through will open next week in the nearby city of Guangzhou, with at least a dozen such stores planned by year end, executives said.

McDonald's, which runs 30,000 restaurants in over 119 countries, opened its first store in China in 1990, after Yum's KFC set up shop in Beijing three years earlier. KFC now has over 1,400 outlets in China, nearly double that of its closest rival. Burger King marked its late entry into the mainland market in June, and planned to about 10 stores in Shanghai this year.