McDonald’s to Dress Up Some Chinese Restaurants

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In 2013, McDonald’s Corp. (NYSE: MCD) opened 275 new restaurants in China, more than a third of all new stores the company opened that year. In 2014, the company plans to open 800 new stores, of which 300 will be in China. McDonald’s will also “modernize” approximately 400 existing stores, according to its annual report filed with the U.S. Securities and Exchange Commission (SEC).

McDonald’s stores in China are mostly company operated, and a report in The Wall Street Journal claims that McDonald’s will be “overhauling a number of its China-based stores” in Beijing, Shanghai, Guangzhou and other cities in an effort to attract more customers as China’s economy continues to slow down.

In China, McDonald’s is a more upscale choice for diners than it may be in the United States or Europe. In February, the last month for which numbers are available, same-store sales in the company’s Asia Pacific, Middle East and Africa (APMEA) region rose 5.4%. Partly the gain was due to timing of the Lunar New Year holiday, but that level of growth is critical when U.S. same-store sales fell 3.3% in February and European sales rose just 2%.

McDonald’s also recently opened its first store in Vietnam.

Same-store sales in the United States were down 0.2% year-over-year in 2013, flat in Europe and down 1.9% in APMEA. McDonald’s even gave away 5 million Egg McMuffins at 5,000 stores in APMEA to promote its breakfast menu. That will not get the job done.

McDonald’s reports first-quarter earnings next Tuesday, and the company is expected to post earnings per share of $1.24 on revenues of $6.73 billion. Expected earnings are below last year’s level of $1.26, while revenues are expected to rise 2%.

The company’s stock closed at $100.25 a share on Thursday, in a 52-week range of $92.22 to $103.34.

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