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FAST-FOOD QUIZ: WILL TAKEOUT SELL IN CHINA?
(FORTUNE Magazine) – McDonald's is the leading fast-food retailer outside the U.S., and it keeps on widening its lead. While McDonald's U.S. sales rose 9% to $4.6 billion for the first six months of the year, international sales rose 37% to $1.3 billion. Nearly 40% of the 597 restaurants that McDonald's opened last year are outside the U.S., compared with about 20% of the 476 restaurants it opened in 1981. The Golden Arches hang over 1,929 non-U.S. restaurants. Kentucky Fried Chicken, which ranks second with 1,813 overseas outlets, opened 168 restaurants outside the U.S. last year, almost as many as in the U.S. During the fiscal year ended May 31, Burger King opened 475 restaurants in the U.S. and 71 in other countries. For most burger flippers and chicken fryers, expansion has been strongest in the Far East. International expansion has yet to pay off for most U.S. fast-food retailers. Neither Kentucky Fried Chicken nor Burger King breaks out international sales or profits, but, says John Rohs, a restaurant analyst with Wertheim & Co., ''Big Mac and Kentucky Fried are the only ones making meaningful international profits, and everyone else is either breaking even or losing money.'' The fast-food servers' problems are similar to those faced by U.S. industrial concerns that have attempted to move operations to foreign countries: Real estate is expensive, suppliers and equipment are difficult to find, and Yankees are not always welcome. McDonald's opened its first restaurant in Rome this year to a chorus of protests that serving hamburgers at the Spanish Steps debased the local cuisine. A fashion designer publicly objected to the smell of frying burgers and forced the restaurant to improve its exhaust system. But the Big Macs and French fries are popular with Roman youth, and McSteps, as one Italian newspaper dubbed it, is one of the busiest McDonald's anywhere. In July, Wendy's International sold its 16 money-losing eateries in Britain for $10 million to Whitbread & Co., which plans to convert them to another kind of chain with a different menu. Burger King has yet to turn a profit on its European operations, and Kentucky Fried Chicken is just getting back into Hong Kong after closing its operations there 11 years ago. The first time around, its restaurants could accommodate only takeout orders, an unfamiliar concept that did not catch on. |
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