McDonald’s In China Petrol Station Deal

The Australian:

FAST-FOOD giant McDonald’s, the world’s largest restaurant company, will start a chain of drive-through fast-food outlets in China with the country’s biggest service station operator, China Petroleum & Chemical Corp.

“We see car ownership taking off in China,” said Jeffrey Schwartz, the chief executive of McDonald’s China, at a briefing in the Great Hall of the People in Beijing. The restaurants will be at an unspecified number of the 30,000 gas stations of China Petroleum, or Sinopec.

McDonald’s has never caught up with Yum! Brands after following the competitor into China in 1990. Yum is the country’s top restaurant operator, with its KFC chain boasting more than twice the number of outlets that McDonald’s has.

At stake are shares of a restaurant industry that’s expected to top 1 trillion yuan ($169 billion) in sales this year, according to China’s commerce ministry.

“It may take a long time for Sinopec and McDonald’s to get benefits from the venture because many Chinese simply don’t have the habit of eating when they stop to buy gas,” said Jason Xu, an analyst at KGI Securities in Shanghai.

China is the world’s fastest-growing major car market. Sales rose 44 per cent to 2.11 million units in the first five months of this year, according to the China Association of Automobile Manufacturers.

The partners in the McDonald’s venture wouldn’t give details on the total cost, timing, or how revenue will be split at yesterday’s briefing. McDonald’s plans to open 100 restaurants a year and “many” will be drive-throughs, McDonald’s president Mike Roberts said.