McDonald's Is Loving It in Asia

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Sacred Cows

A more dynamic menu, plus investments in store renovations, has driven store traffic back to strong levels and improved brand awareness in Japan. "Their menu used to be just a beef patty with a slice of cheese or something," says Seiichiro Samejima, analyst with the Ichiyoshi Research Institute in Tokyo. "Now, there is chicken, shrimp, and more variety than before."

India is a more challenging market, given local dietary preferences for non-meat dishes. Fenton points out that India's eat-out market is about $128 billion a year (compared to $132 billion in China) but is actually growing faster than China's. McDonald's currently has about 110 restaurants in Mumbai and Delhi, and plans to open 25 new outlets a year going forward.

And while beef burgers are something of a taboo for most Indian consumers, McDonald's thinks it has strong enough credentials in fish, chicken, and pork dishes to succeed there. Its outlets in India have developed some popular vegetarian dishes such as McCurry Pan.

Food Styling

One critical task for McDonald's is finding new menu items that not only thrive in one market, but can be exported to others around the company's global system. For instance, the McArabia—a flatbread, spicy chicken fillet, onion and garlic mayonnaise sandwich that debuted in the Middle East a few years back—is now popular in Malaysia and South Africa.

To help make that happen, McDonald's last year opened a food studio in Hong Kong run by a chef and a team of nutritionists to dream up new products.

In the first quarter of 2007, McDonald's is launching a menu item in Australia aimed at kids called Pasta Zoo, in which the pasta is shaped like little animals. And the Hong Kong food lab is working on pasta dishes targeted at adults. Whether it's new menu items such as these in Australia, or gas station-and-restaurant combinations in China, Mickey D's is pulling out all the stops to keep its momentum going in Asia.

Click here for a slide show of McDonald's efforts in Asia.

Bremner is Asia Regional Editor for BusinessWeek in Hong Kong.