China Consumer

McRice and fries

McDonald’s localises menu with mixed success

US-CHINA-CONSUMERDAY/

In China since 1990

In the early 1960s, Ray Kroc, the founder of the McDonald’s chain, had the idea of serving a meatless burger to Catholics who didn’t eat meat on Fridays. Rather than a beef or chicken patty, he proposed a burger with a grilled pineapple slice topped with cheese. He called it the Hula Burger.

The Hula Burger never proved popular (not one of Kroc’s better brainstorms, we opine). But the Filet-o-Fish, which debuted at a similar time – and again with Catholic patrons in mind – soon took off. Kroc quietly took his Hula Burger off the menu.

McDonald’s may now have to deal with another flop, this time in China.

Earlier this month, it introduced four new items to its local menu: Chicken Rice Wrap, Beef Rice Wrap, Chicken Rice Bowl and Beef Rice Bowl.

The wraps all include lettuce, carrot, cabbage, tomato and steamed rice cake. The rice bowls offer beef or chicken covered in a brown sauce and come with a side of steamed rice with corn. The meals range in price from Rmb16 to Rmb20 (i.e. $2.61 to $3.26).

McDonald’s says it decided to launch the new “rice-based” menu after it found that many Chinese customers complained of not feeling “full” unless they had eaten rice. The fast food chain already sells rice-based dishes in other Asian countries, including a popular rice burger in Singapore.

“Our new dining options are examples of how McDonald’s innovates to bring more options to our Chinese customers, because that’s what they want,” says Kenneth Chan, chief executive of McDonald’s China.

The move is significant because it is the first time that the Golden Arches has released a completely new product range tailored especially for the Chinese market. In the past McDonald’s has stuck with minor tweaking of existing fare rather than offering genuinely new food categories. For instance, last year it introduced Egg McMuffin with chicken (instead of sausage) because Chinese consumers deem chicken to be a healthier option.

In this respect, McDonald’s has differed from its rival KFC, which has churned out China-specific products like congee, chicken rice and egg tarts to cater to local tast for quite some time. It worked. KFC, owned by Yum Brands, had opened 4,200 Chinese outlets by the end of 2012, compared with McDonald’s 1,700. Yum Brands now derives more than 50% of its revenues from China.

But if McDonald’s was expecting the new menu to be an immediate game-changer, it will have been disappointed. Many diners didn’t sound especially thrilled by the China-inspired effort. “I would really suggest that nobody tries the baked beef rice. It is basically two jumbo beef patties cut into half and covered with soy sauce. It is nothing like KFC’s rice dishes. My suggestion for McDonald’s is that it doesn’t try to localise again…” one netizen suggested on Sina Weibo.

“After I tried McDonald’s rice dishes I think it’s best that the fast food firm sticks with burgers,” another proposed.

Other customers queried why no chopsticks were made available to eat the rice dishes, reporting that straws were being offered instead. Some also complained that portions were too small for the price.

Others wondered why McDonald’s was choosing to localise now. “Almost every foreign firm’s first step in China is localisation. So compared to its peers, McDonald’s latest strategy seems to be too little, too late,” commented Xiao Yujia, an analyst at CIConsulting.

But industry insiders say the move is an attempt to boost revenues in the dinner segment, with the new rice-based items only available in the evening, according to Innovative Finance Observation. Diners in China eat more fast food for lunch than for dinner, meaning that there is a greater chance to pick up more new business in the evenings if the dinner menu catches on. For the same reasons the chain has also been promoting its takeout and evening delivery service in what McDonald’s Chan calls “a great opportunity for us”.


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