The ‘golden arches’ first arrived in China in 1990, when McDonald’s opened a 500-seat restaurant in Shenzhen.
Back then the brand epitomised luxury for the majority of the population. No surprise: a Big Mac cost Rmb10 at a time when the average monthly salary for urban Chinese was Rmb120 ($18), says China Business Weekly.
Much has changed since then. Like city folk in America, their Chinese counterparts no longer view a McNugget as an exotic luxury. Eating at its restaurants is now perceived to be affordable to many. Now there’s another perception McDonald’s would like to promote: it’s good to eat burgers in the car.
In a recent interview with CNBC, the US news channel, Kenneth Chan, chief executive of McDonald’s China, said he has high hopes for the brand’s drive-through restaurants. “The rapidly growing car industry in China augurs well for McDonald’s,” says Chan.
McDonald’s started out in the US in 1948 with a drive-through outlet. But its drive-through strategy in China began just four years ago, timed to align with the country’s ascent towards becoming a car-owning culture.
Since then 105 drive-through outlets have been added, mainly dotted around Shanghai and the southern cities of Guangdong. McDonald’s told Global Entrepreneur that it plans to add 300 more De Lai Su – a term McDonald’s has coined, which translates roughly as ‘Come and Get It Fast’ – in the next three years. To promote the concept, cuurent ads tout “a brand new way of dining”. Apparently, it’s both “fashionable” and “time-saving”.
Drive-through outlets have been a key part of McDonald’s resurgence in the US in recent years, as tougher economic times see Americans pare back their eating-out budgets. The company has also opened more of them too boost profits (quicker turnaround times and comparatively less investment in location and space).
In China too the drive-through model allows McDonald’s to expand more rapidly and at relatively low-cost along highways, as well as fast-growing city suburbs. One key component of the strategy: a 2006 deal with Sinopec, the country’s second largest oil company, in which McDonald’s plan is to open restaurants at some of Sinopec’s 30,000 filling stations.
Will China’s eating culture mix well with America’s grab-and-go lifestyle? Traditionally, Chinese customers have preferred more leisurely meals. “The majority of Chinese people like to sit down for a meal and the idea of eating in the car is still very novel,” says McDonald’s China vice president Miu Qin, who admits that the concept of drive-through has its limitations. “And besides, most people who frequent fast food chains are kids and young people, and they can’t afford to buy a car.”
McDonald’s has also discovered that some Chinese customers will buy food from the drive-through but then take it to the adjacent restaurant to eat, says Global Entrepreneur. In part that’s because the queue is generally shorter in drive-through. But it’s also cultural. “Fast-food restaurants are still a place for family gatherings and appointments with friends,” says Liu Du, a food-industry analyst with Guosen Securities in Shanghai. “We haven’t fostered a real fast-food culture here.”
The stakes are high. The company now employs more than 60,000 people in the country, although it still lags rival KFC, owned by Yum! Brands. KFC boasts 3,500 outlets, compared with McDonald’s 1,100 (see WiC53).
That means that company executives like to talk about the drive-through strategy as a differentiating move for McDonald’s – and one in which it isn’t having to play catch up on its rivals. “New competitors are coming in with new formats as well. We want to stay one step ahead of the game,” says local CEO Chan.
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