McDonald's plans renovations in Canada

AP News
Posted: Sep 07, 2011 10:37 AM
McDonald's plans renovations in Canada

McDonald's Corp. said Wednesday it will pump $1 billion into renovating its Canadian restaurants, hoping it can reinvigorate itself in Canada as it has in the U.S.

The world's largest burger chain said the changes, including fireplaces and flat-screen TVs, will create "more inviting and relevant" restaurants. Dining rooms will be divided to accommodate for large groups and those who want to linger over the free Wi-Fi access. The company will be using new color schemes, stone and tile accents and wood tones, but said that "splashes" of the chain's traditional colors will remain.

Some restaurants will have two drive-thru order boxes, which should speed up wait times. And McDonald's will also change the layout of its kitchens and add new equipment to help staffers get custom orders correct and to facilitate new menu additions, such as the expanding coffee business.

McDonald's doesn't break out how its Canadian restaurants perform, but groups them with Latin America and corporate activities. That group's revenue rose 22 percent in the second quarter. But at $405 million, it accounted for just 6 percent of the company's total second-quarter revenue of $6.9 billion.

McDonald's has performed well in the U.S. throughout the recession, enticing longtime customers with low prices but also bringing in new customers by trying to repaint itself as a hip, healthy place to eat. In the U.S., McDonald's has renovated restaurants, emphasized healthier items like oatmeal and smoothies, and recast more of its locations as 24-hour operations.

But McDonald's is also aware that U.S. customers are getting tapped out as the economy shows continuing signs of struggling. In the second quarter, McDonald's U.S. revenue rose about 4 percent, impressive compared to some fast-food competitors but anemic compared to a 21 percent increase in European revenue and a 25 percent increase in Asia/Pacific, the Middle East and Africa.

At $2.2 billion, U.S. revenue accounted for 31 percent of total revenue in the second quarter _ down from 35 percent the year before.

McDonald's plans to move quickly on the Canadian renovations, upgrading more than half of the locations by the end of the year, and most of the others by the end of 2012.

McDonald's has about 1,400 locations in Canada, compared to about 14,000 in the U.S. and 33,000 worldwide.

Tim Hortons, the Canadian-based coffee-and-doughnut chain, has about 3,200 Canadian locations.