McDonald's tries home delivery to push China sales

SHANGHAI (Reuters) - McDonald's Corp (MCD.N), the world's biggest fast-food chain, has begun offering home delivery in Shanghai, aiming to build a model in China to boost sales and help it catch up with rival Yum! Brands (YUM.N) in the world's most populous country.

McDonald's has built up a fleet of 300 motorcycles over the past five months to deliver hamburgers from 42 restaurants in Shanghai covering half the city's 14 million population, Shanghai General Manager Leo Li said in an interview.

"Shanghai people are getting busier and busier, and they're hungry for time," Li said.

McDonald's is stepping up its expansion in China, where rival Yum operates twice as many restaurants and started home delivery several years ago to complement dining at its more than 2,000 KFC and Pizza Hut outlets across the country.

McDonald's said last month it would ramp up store openings in China, with plans to open at least 125 restaurants this year and about 150 in 2009.

"For so many years, customers called into our stores to order food for delivery, but our staff were so busy and could only meet the needs of those within walking distance of five minutes," Li said.

He said the company had spent a year preparing for home delivery in Shanghai, but gave no forecast for how much the service would contribute to sales.

Unlike Yum, which in China has its own delivery units, McDonald's chose to outsource the operation.

Hong Kong fixed-line telecoms carrier PCCW Ltd (0008.HK) has set up a call centre with mapping systems, while delivery is handled by two local firms with riders wearing red uniforms and hats emblazoned with the golden arches.

McDonald's plans eventually to launch delivery services in other Chinese cities, Li said, although he gave no timetable.

McDonald's offers home delivery in more than 25 countries, including India, South Korea, Malaysia and Egypt, but not in the United States, Shanghai-based spokeswoman Lisa Howard said.

(Reporting by Samuel Shen; Editing by Edmund Klamann)