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New Zealand's fast-food wars are heating up, with McDonald's revamping its Golden Arch restaurants and revealing plans to open five new outlets each year.
There will be new restaurant layouts and fittings in a push that will cost the United States-based corporation and its 60 New Zealand franchisees $50 million this year and $100 million by 2010.
McDonald's New Zealand country manager Mark Hawthorne said a similar makeover in Australia improved sales and foot traffic.
He emphasised that sales growth would depend on the performance for individual stores.
The makeover includes new imagery and different store layouts to make outlets more attractive to a range of different customers.
The chain's bolted-down plastic chairs will be replaced with free-standing furniture, including couches.
Around 80 per cent of McDonald's restaurants in New Zealand are owned by franchisees who pay a rental for their properties as well as royalties on sales.
Franchise owners will pay for fittings for much of the makeover, although they will be financed for the capital outlay by McDonald's.
But the estimate of $100 million over three years will also include the US corporation opening new stores, a process that was stalled during the sales crisis that hit the American operation a few years ago.
Hawthorne insisted that Australasia sales had not been hurt.
He said McDonald's was planning another five outlets a year in New Zealand and would continue "while that is sustainable".
The McDonald's moves come amid major upheavals in the fast-food sector.
Publicly listed Restaurant Brands, which operates KFC, Pizza Hut and Starbucks, is under pressure after the resignation of chief executive Vicki Salmon in March and a $3.6 million loss in its full-year result.
Meanwhile, filled-roll chain Subway is expanding fast.
Hawthorne confirmed that the McDonald's initiative might counter the rapid expansion of Subway.
The chain has developed a high profile with a healthy eating marketing campaign and competes with its range of healthy choices.
McDonald's is keeping a close watch on Subway, whose outlets cost less to set up than the $400,000 to $1.3 million for a McDonald's.
McDonald's has attracted much of the strongest attacks during the obesity debate.
It has focused a big part of its marketing budget promoting its healthy choice options, though burgers and fries make up a much bigger part of sales.
Burger King has launched an audacious marketing camping featuring girls in bikinis aimed at teenage boys - a key niche for burger eaters.
Restaurant Brands' KFC enjoyed improved sales after a successful makeover.
Hawthorne said McDonald's outlets typically took half of their revenue at drive-throughs.
But the Golden Arches have a 15 per cent share of the "informal eating out" market and had to meet consumer demand for changes that had been identified in research.
Sales revenue in New Zealand had been trailing Australia, where the new look was introduced about three years ago.
Hawthorne said that although there was some level of competition with Restaurant Brands' KFC, Pizza Hut was not in the same market.
"The pizza market is more of a cut-throat market and Pizza Hut have been exposed to some pretty sharp competitors in Domino's."
