McDonald's to launch quality-focused ad campaign; expand franchising in China

McDonald’s (MCD.NYSE) will unfurl a new ad campaign in China this summer which targets food safety and quality concerns as the company looks to capture market share from its biggest rival, KFC (part of Yum Brands; YUM.NYSE), The Wall Street Journal reported. A series of television commercials will be aired during the London Olympics featuring farmers picking vegetables, the company’s “100% fresh beef” products and other advertisements intended to portray the fast food giant’s quality, said a company spokesperson. McDonald’s is also looking to expand its store network in the country, particularly by expanding its franchised operations. Most of the company’s current locations in China are directly owned and operated. McDonald’s 1,400-plus stores will be boosted by a 50% increase in investment this year, with an aim to open 225-250 new stores by the end of 2012. China accounted for less than 3% of the company’s total profit worldwide, or roughly US$300 million before interest and taxes. Yum Brand’s holds 5.2% of market share in China’s fast food industry, compared with McDonald’s 2%, according to Euromonitor, a research firm.