In Asia, not just burgers and fries
Green bean pies, free Net access -- They're lovin' it
BEIJING -- Much of McDonald's Corp.'s success in China -- 42 consecutive months of revenue growth -- is based on its four-year-old five-point strategy focused on product, people, place, price and promotion.
Here's how that strategy plays out in China and Asia, the company's most important growth market over the next 10 years:
MONDAY. Taking advantage of China's growing demand for clean, reliable quick-service food -- and drive-throughs.
TODAY: A look at the McArabia -- chicken patties on unleavened bread -- and other foods that are part of McDonald's recipe for growth in the region.
"They added some cultural things to the menu," noted Chi after a visit to a Hong Kong restaurant.
This year, the company introduced the Mega Mac: a Big Mac with four beef patties, and a Quarter Pounder. After years of pushing its chicken products, figuring they resonate better with the Chinese diet, the chain recently decided to focus more on selling hamburgers. Chinese consumers associate beef with strength and energy, management said, noting a 60 percent increase in sales of beef products. The last new beef product the company added in the United States was the quarter-pound Big N' Tasty burger in 2001.
Beef products now account for 35 percent of McDonald's sales in China. Chicken items make up 55 percent, and fish another 10 percent.
And McDonald's is spicing up the beef and other menu items to Chinese standards. That new Quarter Pounder has a spicy sauce, tomatoes and cucumbers, replacing the blander pickles found on the U.S. version.
The McPepper currently being promoted is a black-pepper-sauce-seasoned double-patty burger. Quarter Pounders also come in Brazil Black Pepper and Cucumber Vegetable versions. A grilled chicken sandwich, a chicken filet burger, the Filet-O-Fish and McWings all come in spicy varieties.
The more intense flavoring is spreading to its beverage offerings, with the company recently introducing a peppermint-flavored soda and root beer.
And many of the new sandwiches are larger, including a sub-length Filet-O-Fish and the McArabia, which has two chicken patties.
Other offerings:
Pies on the mainland are fried and come in root taro, green bean and pineapple varieties. The apple version is available in Hong Kong.
Rice burger with chicken or teriyaki beef, where toasted patties of sticky rice stand in for buns.
A sausage-egg-cheese burger with ketchup is made with a regular hamburger bun.
Sides of sweet kernel corn.
About 25 percent of the McDonald's in China are 24-hour operations, and about 50 percent of the new ones will have drive-through service.
Some have attached dessert kiosks to serve pedestrians. McDonald's also operates separate dessert stands.
Sharing meals that feed three people -- with sandwiches, fries, drinks and chicken nuggets or wings -- for about 56 Hong Kong dollars (about seven bucks U.S.) are popular.
McDonald's is launching a similar version of its dollar menu, and is offering a smaller version of its Extra Value Meal for a reduced price.
The smallest version, with small fries and small drink, goes for two bucks. Customers can pay another 40 cents and get medium fries and a medium drink. Another 80 cents gets a large fries and large drink. Management tries to distance it from the supersize concept it abandoned several years back.
In May, it launched its China Mom's Panel. That follows the establishment of a worldwide focus group of mothers, and a Mom's Club program launched in May that more than 10,000 women have signed up for in order to access in-restaurant activities such as story-telling, arts and crafts, exercise instruction and games.
Last year, McDonald's began working with the China Cuisine Association to promote new national restaurant hygiene standards in China. They apply to China's 4 million restaurants. McDonald's provides money, training materials and training opportunities.
Kitchens, meeting rooms, tasting booths and areas for focus groups at the food studio enable its dozen employees -- including a chef and nutritionist -- to take products from conception to testing.
Its workshop, called the Forbidden Kitchen in a nod to China's landmark Forbidden City, was one of the first investments Tim Fenton made after taking over as president of the region in 2005. McDonald's runs facilities in Romeoville and Paris that are also focused on developing food for local taste buds.
"It demonstrates our commitment to quality, and our determination to serve relevant foods to our customers, taking into account their unique tastes," Fenton said. "So, this facility is all about ensuring our standards are met, that they are consistently applied, and that we serve good food that our customers enjoy."
On a recent tour of the kitchen, McDonald's executives enthused about one of its most recent productions: the Chicken Mushroom Pinwheel. Currently in the testing phase, the four-pointed pinwheel-shaped pastry filled with chicken and mushrooms could be offered as a snack item, tea-time menu food and/or Happy Meal component.
And Forbidden Kitchen staffers already are envisioning barbecue chicken, vegetarian and breakfast pinwheel varieties.
Other items newly created for pan-Asian taste buds:
• • A teriyaki pork burger, with lemon-flavored mayonnaise.
• • The McArabia, featuring chicken patties on unleavened bread, garlic sauce, onion.
• • The Grilled Chicken Burger, presenting chicken thigh meat -- dark is preferred over white in Asia -- on a multi-grain bun with sunflower, black and white sesame seeds and toasted oats. It's being launched in Taiwan the first of the year.
• • A shrimp burger patty sold in Japan.
• • The Bulbogi Korean pork barbecue sandwich.
The kitchen is in the same building that houses the company's quality lab, where local suppliers share best practices, and food and ingredients are tested for standards.
They want to make sure that Big Mac tastes the same from Syracuse to Seattle to Shanghai.
Buns, for example, should be a particular shape (round, symmetrical), have a certain resistance (when pressed, bread needs to spring back), color and even a desired number of seeds. In addition, toasting time must be calibrated just so. And the texture must be such that the sauce can't seep into the bun and make the bread soggy.
cjackson@suntimes.com
KFC (then part of PepsiCo) opened a store in Beijing in 1987 and generated more than $269 million of revenue that first year. The growth in its China Division led Yum!, which also owns Pizza Hut, another rapidly expanding China market player, to raise its full-year earnings-per-share outlook. September-quarter operating profits soared 23 percent, while sales there increased by 25 percent. Yum also operates a Chinese food chain there.
The company expects China to account for 20 percent of its profits over the next five years.
KFC is pushing chicken ala king rice, cross-cut fries, whole BBQ honey wings, honey biscuits, egg tarts and strawberry custard, as well as a minisausage biscuit that is available for tea time. Pizza Hut ads promise to deliver hot more than 100 dishes.
Other U.S.-based food companies are making plays for Chinese palates.
• • Papa John's operates 45 outlets in China, and Dairy Queen and Haagen-Dazs have stores there.
• • NBA star and McDonald's spokesman Yao Ming, a Shanghai native, opened a restaurant in Shanghai's Jingan District earlier this year, expanding the Yao Restaurant and Bar theme that opened in Houston in 2005. Plans are to open another in Beijing.
• • Starbucks Corp. in October bought Beijing Media Coffee Co., which operated more than 60 Starbucks retail outlets in Beijing (including one in the Forbidden City itself) and Tianjin. Starbucks opened its first China store in 1999, and brews java in about 200 locations in mainland China and more than 430 in Greater China.
• Wm. Wrigley Jr. Co. owns more than 60 percent of the gum market in China. Citrus and fruit flavors are big there, where Wrigley offers an apple flavor of its Juicy Fruit brand and blueberry and lemon varieties of its popular Extra. Asia is the company's fastest growing region, driven by China.
cjackson@suntimes.com