McDonald's Adds European Feel While Doubling in China

McDonald’s is investing in European-style makeovers for 80% of its China outlets by 2013 to attract more young urban adults even as it plans to add 1,000 more restaurants there.

“We want to attract young people and make them loyal supporters of the simple and happy lifestyle,” said McDonald’s China CEO Zeng Qishan.

Last year the chain gave European-style makeovers to 100 of its 1,000 China branches. This year it will do the same for 700 more in a bid to turn its restaurants into places in which people aged 18-28 want to hang out. That means toning down the cheerful yellow and red decor aimed at kids into hues more suggestive of European cafés.

The new makeover involves rearranging tables, adding ambience and offering free Wi-Fi internet access starting April in Beijing, Shanghai, Guangzhou and Shenzhen stores. The chain’s goal is to peel off customers from Starbucks and other coffee chains. During 2011 McDonald’s experimented with independently-operated coffee corners inside its stores in Beijing and Shanghai.

It’s also throwing out the old slogan “I’m lovin’ it!” for the new “Reserve some space for happiness,” to suggest that it’s inviting its customers to linger over their coffees.

McDonald’s boosted capital investment in its China restaurants by 35% in 2011 and plans to pump it up another 40% over that in 2012. It has spent 7 billion yuan ($1.1 billion) on its China makeover to date, most of it for new outlets and upgrading its image.

So far McDonald’s is a distant second in China behind KFC’s 3,000 outlets. But the 1,000 Golden Arches outlets enjoy profit margins that are five times that of KFC and Pizza Hut, both of which are operated by Yum! Brands.

McDonald’s sees potential for continued rapid growth as China’s urban population of 615 million is expected to swell by another 100 million within five years. The chain is planning to double its total number of outlets in China by 2013.