McDonald's unveils aggressive China expansion plan

Fast food chain McDonald’s (MCD.NYSE) plans to open 200 new stores in China in 2011, more than in any previous year, the Wall Street Journal reported. The company will also replace the old red-and-yellow design of its outlets with a European-style bistro design, with 80% of existing restaurants scheduled for remodeling by 2013. McDonald’s didn’t specify the value of its investment but its capital spending in China will rise 40% year-on-year in 2011. Half of the new restaurants will be drive-through outlets and there will be more McCafes, 24-hour restaurants and delivery services. The more sophisticated store design is intended to give the company more leverage to introduce premium products and raise prices. Following sharp food price inflation in China, prices have been raised twice in the last year. McDonald’s also faces increasing competition from Yum! Brands (YUM.NYSE) chain KFC – which has about 3,200 locations to McDonald’s 1,100 – and several other foreign and domestic players.