Behind in Quantity, McDonald’s Touts Quality

Fast-food giant McDonald’s will open a record 225 to 250 outlets in China this year, according to its China chief, as it boosts investment in an attempt to catch up to its main rival. From China Daily:

“In 2012, I will add more than 100 dessert kiosks, and operate 600 McDelivery hubs with online ordering. Around 40 percent of the new stores openings will be drive-thru,” said Chan.

“Drive-thru is one of the fastest-growing businesses.” After entering China by opening its first restaurant in Shenzhen in 1990, the fast-food giant has seen rapid development in the country. In 2011, McDonald’s opened a record 200 new outlets in the country.

It now has more than 1,400 restaurants in 26 provinces, autonomous regions and municipalities on the Chinese mainland and aims to expand that network to more than 2,000 outlets by 2013.

McDonald’s lags behind its rival Yum Brands Inc in opening outlets in China. Yum has opened about 4,500 restaurants under brands including KFC, Pizza Hut, East Dawning and the recently acquired Little Sheep.

McDonald’s push to make up ground in China’s fast-growing casual dining market also includes a new ad campaign that hits on heightened anxiety over food safety. From The Wall Street Journal:

The fast-food giant is planning to air a series of television commercials this summer to portray itself as the fast-food brand in China with the best quality. The ads will feature “100% fresh beef” on the chopping block, farmers picking tomatoes from the vine and chickens eating high-quality feed, according to a company spokeswoman.

Ads will air on Chinese TV networks ahead of and during the Summer Olympics in London, of which McDonald’s is an official sponsor and expects to make an impression on a high number of Chinese viewers. “We’re not out to have the most stores in China, but we want to have the highest quality,” Kenneth Chan, chief executive of McDonald’s China, said in an interview Tuesday. A spokeswoman declined to disclose spending.

Chinese consumers typically feel that Western food chains use safe ingredients, said Ben Cavender, a senior analyst at China Market Research Group. However, Chinese consumers are weary of food quality in the country after repeated spates of sometimes deadly food-additive scandals and upheavals in which some restaurants were found to cook with oil collected from gutters.

Still, the ad campaign comes as the industry faces increasing scrutiny in China. McDonald’s itself earlier this month said it had never used beef treated with ammonium hydroxide in China, as reports that the company had withdrawn the additive in the U.S. reached the mainland. KFC last year defended its use of powdered soy milk rather than fresh milk after facing online and media criticism, saying the powdered product met quality demands that it couldn’t match with fresh soy milk.