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The Honolulu Advertiser
Posted on: Sunday, June 25, 2006

McDonald's building drive-throughs in China

By CALUM MACLEOD
USA Today

BEIJING — As lifestyles and car sales speed up in China, McDonald's is counting on Chinese consumers to follow Americans — down to the drive-through.

The world's largest restaurant company signed a deal last week to build drive-through McDonald's outlets in the filling stations of China's largest gas retailer, state-owned Sinopec.

"With the incredible development of China's economy and society, car ownership continues to grow at a rapid pace," says Mike Roberts, president and chief operating officer of McDonald's in Beijing.

The strategic alliance with Sinopec gives McDonald's "a look at 30,000 sites across China," says Roberts.

"We only have three drive-throughs at present," in a total of 760 China restaurants.

Catering to China's new car-owning middle class underpins McDonald's expansion goals.

"We will open 100 restaurants a year for as far as the eye can see," Roberts says.

Up to half the 240 new outlets planned by 2008 will feature drive-through facilities.

The switch to drive-through is about "making McDonald's convenient, and matching consumer lifestyle needs," says Roberts, on his third visit to China this year to boost the brand's presence and close the gap on its rival, Yum Brands' KFC.

Those changing lifestyles were on show last week at a busy McDonald's branch on Beijing's east-west axis, the Avenue of Eternal Peace.

Gone is the slower pace of old China, where friends gathered for long banquets.

"I only have an hour at lunchtime, so this is quick and convenient if I'm by myself," says salesman Huang Zhengchang, 43, lining up for his 20 yuan ($2.50) meal.

"I plan to buy a car this year, so I will try a drive-through restaurant, but they won't necessarily be successful," he says. "Chinese prefer to eat together, not in their cars."

Both vehicle output and sales in China jumped by more than one-third in the first quarter from last year, said the China Association of Automobile Manufacturers in April.

China is already the world's second-largest automobile market, behind the United States. Almost 1,000 new cars hit Beijing's streets every day.

Western-style fast food is also proving popular.

"In China's eight largest cities, fast food now accounts for just under 21 percent of total restaurant receipts," says Paul French, chief analyst at Access Asia, a Shanghai-based market research company.

"McDonald's drive-throughs will grab the publicity," he says. "But what they are really getting is good downtown locations in cities where they are hard to find. There will be a lot of foot traffic."

Unlike in the company's U.S. stores, up to 250 seats will be built in the drive-through outlets.

"I see people drive through, park and then bring the food inside" at the three existing drive-throughs, says Jeffrey Schwartz, CEO of McDonald's China.

"They wanted the entire experience, and to see the beautiful restaurant inside."

Rival KFC, capitalizing on China's preference for chicken over beef, boasted 1,900 outlets in 2005, and average growth of 20 percent in the past five years.

"We are about being better, not bigger," says McDonald's Roberts. "We can deliver a great customer experience. We are not chasing somebody else."