McDonald’s introduces local cultural elements into restaurant design as it strives to counter slowdown

By Chu Daye in Guangzhou Source:Global Times Published: 2014-4-21 0:33:01

US fast-food company McDonald's Corp unveiled over the weekend a flagship restaurant design, which combines Chinese elements and the chain's trademark, in Guangzhou, South China's Guangdong Province.

The restaurant, named "EATERY," mingled McDonald's traditional color blocks of red, yellow, grey and black with a variety of traditional Chinese elements, aiming to make a deeper brand imprint through modern restaurant designs.

The new design was released amid a global slowdown in the fast-food industry, with consumers switching to healthier diets which involve less fried food and soda.

Kenneth Chan, CEO of McDonald's China branch, said that the design aims to help McDonald's blend in the local market better.

"If our customers like it, there will be more restaurants with such designs to follow. If not, we have other styles ready for experiment," Chan said.

McDonald's current interior design with its open space and bright colors could not necessarily match the expectations of young consumers aged below 25 and children, who aspire for a "more inclusive space" for them to socialize, Sun Dongliu, an industry researcher with Shenzhen-based Zero Power Intelligence, told the Global Times.

"The change in the restaurant style, which makes it closer to the Chinese culture, comes at a time when McDonald's feels its growth in China is losing steam. But the effect of such a change depends on how determined the management is to pursue this strategy," Sun noted.

Christine Xu, vice president of marketing of McDonald's China, said the company has been renovating the interior designs of its restaurants in the country during the past few years to provide the customers with a better dining environment, but the previous renovations were primarily based on concepts from Europe and Australia.

For over two decades, McDonald's has been seen by Chinese consumers as a totally foreign entity in contrast to traditional Chinese culture, and its brand imprint is so deep that its new move can only take effect gradually, Sun said.

"It is not easy to find the correlation between restaurant interior design change and restaurant performance," Sun said, noting that the new design should be a contributing factor to the sales of the Chinese-style food being offered by McDonald's.

In 2013, McDonald's opened a record 275 restaurants, making China the fastest-growing market in terms of restaurant openings in McDonald's system worldwide, Chan said.

After growing rapidly for over 20 years, McDonald's business in China began to show signs of slowdown since 2012, partly due to a diversion of fashionable young Chinese consumers to the Chinese fast-food chains such as Zkungfu and Shunkouliu, and coffee chain Starbucks, Sun said.

The same impact was felt by Yum Brands Inc's fast-food chain KFC. In 2013, the sales volume of KFC in China dropped by 15 percent year-on-year, bringing down Yum Brands's China revenue by 26 percent compared to 2012, according to the company's fiscal report published in February. KFC now operates over 4,000 restaurants across China.

Foreign fast-food chains are not the only ones feeling the pain of slowdown in the China market.

According to a report released on Saturday by the China Cuisine Association, the combined revenues of China's 100 largest restaurant chains grew by 5.7 percent last year, which was 10.8 percentage points lower than 2012, the Xinhua News Agency reported.

The chains' average net profit margin narrowed to 4.1 percent in 2013, down 3.62 percentage points from 2012, the association said.



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