McDonald's to up China cap investment by a quarter

Thu Jan 28, 2010 10:34pm EST
 
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By Donny Kwok and Fion Li

SHENZHEN (Reuters) - McDonald's Corp MCD.N, the world's largest hamburger chain, said it expects to boost its capital investment in China by about a quarter this year to tap the growth of the world's third-largest economy.

"We expect to increase our capital investment by 25 percent over last year," said Kenneth Chan, McDonald's China CEO, told reporters during the launch of a new marketing campaign on Friday.

"We continue to be extremely bullish about our business in China and will continue to invest in opening new restaurants," Chan said, but declined to disclose the investment amount for 2009 or 2010.

McDonald's, which competes with Yum Brands' YUM.N KFC in the U.S. and China, and Ajisen (China) 0538.HK in the mainland, a noodle restaurant chain operator, was planning to open 150 to 175 restaurants in China in 2010, which would lead to the creation of 10,000 new jobs, he added.

The company said it had 1,135 stores in mainland China as of the end of 2009.

McDonald's is launching a new brand concept called "Make Room for Happiness" to mark the 20th anniversary of the opening of its first restaurant in Shenzhen.

Last week, McDonald's posted a profit for the fourth-quarter of 2009 of $1.22 billion, up from $985.3 million a year earlier, helped by strength in Europe and a small rise in December sales in the U.S. It said same-store sales gained 1 percent in December after two months of declines in the United States, where high unemployment and rampant discounting are straining results.

December same-store sales in Europe topped forecasts with a 5.1 percent gain, while the Asia-Pacific, Middle East and Africa region missed analyst calls and were up just 1 percent. Globally, same-store sales rose 2.7 percent for December and 2.3 percent for the quarter, the company said.