McDonald's to speed up east Europe expansion
POZNAN, Poland (Reuters) - Fast food giant McDonald's Corp (MCD.N) will speed up its expansion drive in central and eastern Europe to tap into the region's vibrant growth and increasingly affluent middle class, its No. 2 official said.
Over the last several years, McDonald's has not grown significantly in Europe's emerging economies such as Poland or Romania as it focused on improving its image in the continent's more established markets, such as France and Britain.
The group plans to invest another $1-$1.1 billion in its European restaurants next year, McDonald's President and Chief Operating Officer Ralph Alvarez told Reuters in an interview at a newly remodeled restaurant in Poznan, western Poland.
But after revamping four out five outlets in western Europe, the hamburger chain is shifting focus to former communist nations to the east, which unlike many of the more developed markets, have so far been mostly immune to the global slowdown.
"In central and eastern Europe the opportunity for growth is tremendous," Alvarez said. "Between Ukraine, Poland and Romania, with more than 100 million people and thriving economies, all we have is 350 restaurants."
McDonald's also targets Russia and China for growth, he added.
In Poland, the European Union's largest ex-communist member where the first golden arches appeared in 1992, the group plans to boost the number of restaurants by 50 percent from 214 over the next three to five years, Alvarez said.
As in most of the 118 countries where it is present, McDonald's offers its hamburger-based menu in Poland with a local touch, such as the WiesMac, a hamburger with horseradish sauce.
BREAKFAST AND MCCAFE
The group launched a marketing campaign to promote its breakfast menu to convince Poles, who unlike their U.S. or British counterparts rarely eat their first meal of the day away from home, to have one at McDonald's along with coffee.
"There is an opportunity for breakfast out here," Alvarez said during the first leg of a European trip. "But you have to have credibility in coffee to have credibility in breakfast."
As elsewhere, McDonald's has also reworked its higher-margin coffee offering and is even testing separate cafe corners under the McCafe shield within existing Polish restaurants.
The McCafe coffeehouse concept is already popular in countries such as Australia and Germany. McDonald's has introduced McCafe espressos and cappuccinos in more than 2,500 U.S. restaurants to take on Starbucks (SBUX.O).
Despite seeing commodity prices soar at the highest pace in its history, McDonald's will continue to use its value offerings, or Dollar Menu, in the United States to attract customers squeezed by the deteriorating economic conditions.
"There will probably be some migration over the next year, but a majority of what's on the Dollar Menu will stay on it," Alvarez said, adding the company has not yet made any decisions. Continued...
