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Last Updated:  Tuesday, 8 April, 2003, 02:57 GMT 03:57 UK
McDonald's goes upmarket
McDonald's restaurants have lost their allure
Fast food giant McDonald's says it is changing direction, after suffering the first loss in its 55-year history.

The firm's executives have conceded that its approach is out of date and would now change to give more healthy food and higher quality burgers.

The world's largest restaurant chain is also planning to open fewer restaurants - expanding by only 360 outlets this year, compared to more than 1,000 in 2002.

Once one of the best-performing companies in the world, McDonald's has seen sales fall for 12 consecutive months and reported its first quarterly loss in January.

The firm has been hit by a combination of food safety scares and increasing weariness among consumers about its monotonous menu.

The world has changed. Our customers have changed. We have to change, too
Jim Cantalupo, McDonald's
In 2003 McDonald's plans to invest $1.2bn, some $800m less than last year - a reduction mainly achieved by cutting back on new restaurants.

Chief executive Jim Cantalupo said the company needed to "do fewer things and do them better".

McDonald's traditional approach has been to expand by building new restaurants selling cheap burgers.

"The world has changed. Our customers have changed. We have to change, too," Mr Jim Cantalupo said.


The company plans to introduce a "premium hamburger" made with more wholesome meat.

It says staff will be better trained, would smile and apologise.

Stainless steel and plastic will be counter-balanced by "aroma and warmth", executives say.

The company plans to launch a worldwide advertising campaigns to try to transform its image.

The BBC's North America business correspondent, Stephen Evans, says the question is whether the McDonald's name is too associated with low prices and cheap quality to be changed.

Investors, for their part, have welcomed the news, sending shares up almost 9% on Monday.

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