A Closer Look at McDonald's China Expansion Plans Through 2013

McDonald's will increase its investment in China by 40% and open 175 to 200 new stores in the country in 2011 and 1,000 stores by 2013, McDonald's China CEO Zeng Qishan said Wednesday.

Half of the new openings by 2013 will be drive thru stores, which currently account for 10% of the Golden Arches' total restaurants in China. The number of drive thru stores are expected to reach 550 by 2013, Zeng said. KFC, its bitter foe, has less than 70 drive thru stores in the country.

"We invested 25% more in 2010 than the year before and we are going to upgrade 35% of our restaurants in China to European style and step up marketing our McCafe, but we will not sell Chinese style food," said Zeng, suggesting the company would not follow the adaptation tactic employed by KFC. KFC has launched some products whose names or raw materials are more Chinese, such as rice.

"Coffee will be a lucrative market in China in 20 years, though it is not a big one at the moment," Zeng noted. McDonald's coffee products cost ¥10-¥25, cheaper than Starbucks, so its focus on this segment market will definitely have some impact on the world's largest coffee house chain.

"We will not further raise prices to cover rising expenses as we are confident we will attract more customers," Zeng told QQ.com. McDonald's China had a minor markup in November.

McDonald's currently runs over 1,100 stores in China compared to over 3,000 by KFC. It took McDonald's 19 years to crack the 1,000 mark. KFC spent 17 years to do that and another three years boosting the number to 2,000.

Sources:
http://finance.qq.com/a/20101215/004859.htm
http://www.yicai.com/news/2010/12/628931.html
http://www.linkshop.com.cn/web/archives/2010/149976.shtml