Not Lovin' a Drop in China Sales, McDonald's Revamps Its Image

The U.S. Fast Food Chain Has Launched Its Biggest Campaign in China in Nearly 7 Years to Promote a New Store Design, Value Menu Items and Its Focus on Happy Diners

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The centerpiece of the campaign is a 3-D graffiti art piece that was unveiled at Beijing's Wangfujing pedestrian street on Dec. 30, 2009.
The centerpiece of the campaign is a 3-D graffiti art piece that was unveiled at Beijing's Wangfujing pedestrian street on Dec. 30, 2009.

SHANGHAI (AdAgeChina.com) -- McDonald's is revamping its image in China in an effort to rebound from a drop in sales during a tough 2009. The U.S. fast food giant has kicked off its biggest branding effort since introducing the global "I'm lovin it" campaign in the mainland in 2003.

McDonald's hopes the new "Make room for Happiness" campaign will create a more appealing and contemporary image for the brand, and is adding some special touches like a digitally-promoted "ping lunch@McDonald's" to bring fast food fans together for a group lunch.

The centerpiece of the "Make room for Happiness" campaign is a 3-D graffiti art piece titled" Open the Doors to Happiness." It will tour China this year, and started with an event at Beijing's Wangfujing pedestrian street on Dec. 30, 2009, featuring Chinese film actress Huo Siyan.

The campaign is an extension of McDonald's global tagline, "I'm lovin' it," which advocates self confidence.

In China, McDonald's wants to take that philosophy a step further by encouraging young city dwellers to remember to make time for happiness in their busy schedules and to enjoy life's simple pleasures, said Shanghai-based Phyllis Cheung, McDonald's VP and chief marketing officer in China.

"The China market landscape has changed and we need to change," she told Ad Age China, referring to trends like the growing urbanization and the explosion of technology.

"Customers' lives are getting more complicated with time and work pressures; 24 hours of time needs to deliver 48 hours of productivity. The simple happiness we used to enjoy like having quality time with kids, face-to-face conversations with partners and moments for oneself are becoming more difficult."

Weakening sales in China
But the company's executives know change is needed to halt the slide in sales the industry faced last year. In November 2009, McDonald's sales in Asia/Pacific, the Middle East and Africa decreased 1.0%, partly due to "continued weakness in China," the company said in a statement last month.

"The China market landscape has changed and we need to change"
McDonald's isn't the only fast food chain worried about a drop off in sales. Last month, Yum Brands, the parent of KFC, China's leading fast food chain, said it expected fourth-quarter same-restaurant sales to fall 3% in China.

Until the global recession hit a year ago, China was a booming market for fast food chains. But much of the growth in past years was coming from booming factory towns. As consumption fell in the West, many Chinese factories have closed or slashed production.

During tough times, consumers tend to scale back spending on out-of-home dining. In western markets, where consumers may trade down to a burger and fries, that helps fast food chains like McDonald's and KFC. In China, however, western restaurants are relatively expensive, and Chinese are more likely to trade down to a plate of chicken and rice in a local restaurant.

Lower prices and new image
The executives running McDonald's in China know this. In April 2009, they dropped lunch prices to compete with local businesses that sell food for up to 40% less than western chains. Roadside stalls are even cheaper.

Further prices cuts in November 2009 weren't enough to boost sales, prompting McDonald's to overhaul its image in China, as a place that offers both value and a fun hangout.

McDonald's will incorporate "the concept of happiness into every single touch point," said Beijing-based Miao Qin, McDonald's VP and general manager, northern China.

McDonald's is upgrading its restaurant with interiors made of natural materials, using soft mood lighting, textured walls and multi-functional spaces.

By the end of 2010, more than half of McDonald's 1,137 outlets in China will sport the new image. Within three years, more than 80% will be upgraded.

McDonald's is also giving diners unlimited free coffee refills and complimentary mini ice cream cones to kids on weekends.

McDonald's also offers free wi-fi services for the first half hour diners are in its restaurants in over 50 outlets in Beijing, Shanghai, Guangzhou and Shenzhen. By April 2010, 90% of its outlets in those four cities will offer wi-fi.

Digital campaign focused on lunch crowd
These changes will be marketed with "a major new branding approach by McDonald's," said Donald Chan, Shanghai-based CEO, China at TBWA Group, the lead creative agency for the campaign.

Tribal DDB directed digital activation, Weber Shandwick handled publications and social media activities and OMD did media planning and buying.

The digital campaign "targets office workers and their most important day-part to make room for happiness -- lunch," said Mike Zeng, business director, Tribal DDB, Shanghai. Between high prices, crowds and noisy environments, the lunch hour "is not a happy time for most office workers."

The digital campaign is built around the concept of a "ping lunch," which in Chinese also means having a "group lunch," or a group of people pooling funds to save money.

During the lunch hour, Chinese in key markets can access their location on a city map on the McDonald's campaign site, www.mcdonalds.com.cn, find other McDonald's fans in the same area and invite them to a "ping lunch @ McDonald's." Viewers can browse groups and select one to join, or start a new group and invite others. As a group, the diners will get special offers.

Diners can upload stories about their group lunch on the site, which was created with China's biggest white-collar social networking site, Kaixin001.com.

TV spots by TBWA, Shanghai show McDonald's diners sharing personal moments like a father watching his son eat a free ice cream cone.
TV spots by TBWA, Shanghai show McDonald's diners sharing personal moments like a father watching his son eat a free ice cream cone.

In November 2009, McDonald's sales in Asia/Pacific, Middle East and Africa decreased 1.0%, partly due to continued weakness in China.
In November 2009, McDonald's sales in Asia/Pacific, Middle East and Africa decreased 1.0%, partly due to continued weakness in China.



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