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McDonald's puts 6 more cities in 24-hour loop

By Ding Qingfen (China Daily)
Updated: 2009-05-19 07:57

A customer enters a McDonald's store in Wuhu, Anhui province.[China Daily]

McDonald's has expanded its 24-hour delivery service to other cities in China after a one-year trial in Shanghai. This is part of the company's efforts to win more customers and offset the impact of the economic downturn.

The McDelivery service has been extended to six other cities - Beijing, Guangzhou, Shenzhen, Wuhan, Nanjing and Tianjin. McDonald's has promised that each McDelivery would be completed within 30 minutes. There is no requirement for a minimum order amount, and each McDelivery will be charged 7 yuan.

Kenneth Chan, chief executive officer of McDonald's China, said the service might be further expanded into second- and third-tier cities, and even nationwide, in the future.

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Chan said the trial in Shanghai, which started last May, had been an "overwhelming success".

The McDelivery service "has been extremely popular in Shanghai and represented a big part of the growth (in McDonald's Shanghai business)", Chan said. This makes McDonald's believe "it can do a great job in delivering the service in more cities", Chan, who refused to give out the revenue breakup from the Shanghai McDelivery service, said.

"It will become another powerful driver in our China business," he added.

The financial crisis has dealt a bigger blow to China's fast food market than other regions globally, as fast food is viewed as a luxury by quite a number of Chinese consumers, especially those in smaller cities.

When asked if there was any signal of recovery in China sales for the first quarter, Chan refused to elaborate. "The figure is within our expectation given the economic recession," Chan said.

During the first quarter, McDonald's global sales revenue grew by 4.3 percent from a year earlier. The markets for Asia, Middle East and Africa cumulatively grew by 5.5 percent year-on-year. The growth figure for the China market had been in double digits before 2008.

Jeff Schwartz, former CEO of McDonald's China, told China Daily in February that its country sales for December last year and the last quarter of 2008 were "soft".

KFC, McDonald's chief fast food rival in China, said sluggish growth in the country had driven down the share price of its parent company Yum Brands Inc.

Last July, KFC, which owns the largest fast food network in China, launched a round-the-clock delivery service covering five cities, including Beijing, Guangzhou and Shenzhen. The company had said the service would be extended nationwide. KFC charges 6 yuan for each delivery.

KFC and McDonald's expect their 24-hour delivery services to help improve business performance and enhance their brand awareness in the country.