Japanese ambitions for McDonald's

McDonald's plans to reach 10,000 outlets in Japan

Hamburger chain McDonald's says its first listing on a foreign stock market, in Japan, will enable it to triple the size of its business in that country.

The company plans to build on its already huge Japanese network with new restaurants in schools, hospitals and even on the world-famous bullet train.

Den Fujita, the 75-year-old president of McDonald's Co (Japan), said he was confident of hitting a goal of 1.0 trillion yen (£5.7bn) in annual sales within 10 years, and maybe even faster than that.

McDonalds: adapted for the Japanese market

The Japanese venture will become the first foreign unit of US fast food giant McDonald's to go public overseas when it lists on the JASDAQ market on 26 July.

The flotation price was set on Monday at 4,300 yen ($34.44) a share, raising 51.6 billion yen ($413 million), and at the top end of expectations.

It is in one of Japan's largest initial public offerings (IPOs) this year.

Market share

Mr Fujita said he was aiming for 5% market share, which he had already achieved in some regions.

Mr Fujita, who launched McDonald's Japan 30 years ago by opening the first store in Tokyo's gltizy Ginza district, said last month the company aimed to triple outlets to 10,000.

McDonald's Japan is currently 55% owned by the U.S. parent and 41% by Mr Fujita and his family.

Sales of McDonald's Japan, which operated 3,598 outlets as of the end of December 2000, totalled 357.9 billion yen last year.

Saturation point

But investors are concerned that Japan's fast-food industry could be reaching saturation point.

Because Japan trails 15 to 20 years behind the United States, we can see how things develop there and then introduce changes that prove successful

Den Fujita, Mcdonald's Japan

"There is a fear that its share in the burger market is already so large that there is some concern about how much more it can expand," said Michael Jacobs, analyst at Dresdner Kleinwort Wasserstein.

Mr Fujita seemed unconcerned that McDonald's Japan may be losing its growth momentum and he saw plenty of opportunity for growth.

"Train stations number in the tens of thousands and I believe we can expand our station outlets if we set our mind to it," Mr Fujita said.

"Offers are just pouring in."

New products

Mr Fujita invented the Teriyaki burger to suit the Japanese palate.

And he is considering introducing non-burger fast-food to boost his customer base.

"The US McDonald's is experimenting with new products like Mexican food and pizzas," Mr Fujita said.

"Because Japan trails 15 to 20 years behind the United States, we can see how things develop there and then introduce changes that prove successful," he said.

Price war

Mr Fujita triggered a cut-throat price war in the fast-food industry last year by slashing hamburger prices on weekdays by half to just 65 yen (37p).

But he said he had no intentions at the moment of cutting prices further.

"It depends on foreign exchange rates.

"If the yen firms to around 80 yen a dollar, another price cut would be possible."

One of Mr Fujita's toughest competitors, Yoshinoya D&C , Japan's top beef-and-rice chain, said in July it would cut the price of its standard bowl by 30% to 280 yen, fuelling already intense price competition.

McDonald's Japan is set to issue 12 million new shares in the IPO and hopes to rake in as much as 51.6 billion yen.