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McDonald's Accelerates Openings, Pushes Trans-Fat-Free Fries

A McDonalds sign welcomes patrons into the restaurant in Wilmington, Del., Wednesday, Jan. 24, 2007. McDonald's Corp., the world's largest fast-food chain, says its fourth-quarter profit more than doubled, thanks in large part to the spinoff of a burrito chain and strong sales in Europe. (AP Photo/Chris Gardner)
Chris Gardner
A McDonalds sign welcomes patrons into the restaurant in Wilmington, Del., Wednesday, Jan. 24, 2007. McDonald's Corp., the world's largest fast-food chain, says its fourth-quarter profit more than doubled, thanks in large part to the spinoff of a burrito chain and strong sales in Europe. (AP Photo/Chris Gardner)

McDonald'schief executive said he expected the world's largest restaurant chain to increase the pace of opening new restaurants, which had been reduced for four years ago as the company focused on improving operations.

"We do expect to pick the growth rate up some," CEO Jim Skinner said during a news conference following the company's annual shareholder meeting on Thursday.

Over the past several years the company has increased the number of restaurants by about 0.9% to 1%, Skinner said. That rate is likely to increase to about 1.2% to 1.3%, he added, but did not give a time-frame.

The company plans to spend about $1.9 billion in 2007 on opening about 800 new restaurants and remodeling about 2,000 others, Skinner said.

But McDonald's also closes some restaurants each year, and earlier this year the company said net openings for 2007 would be about 400.

McDonald's has more than 30,000 restaurants worldwide and is looking to expand in countries where it is seeing good returns, including the United States, Britain, China and Russia.

But Skinner also said that the new restaurant growth rate would likely not get above the company's target of 1% to 2% annually. Before implementing its turnaround strategy, McDonald's had been criticized for growing too quickly and ignoring operations at older restaurants.

Hold the Trans Fats

Separately, it also expects the U.S. roll-out of trans-fat-free fries to be completed within a year, Ralph Alvarez, McDonald's president and chief operating officer, said.

The company already offers trans-fat-free fries in about 3,500 restaurants in the United States.

The pace at which the company can have trans-fat-free frying oil in all restaurants is limited by the amount of available soybeans and rape seeds used to make the oil, so the company is dependent on the harvest cycle in North and South America.

McDonald's has improved sales over the past four years by focusing on operations and new products.

The company has increase spending on product development and is testing items such as fruit-based smoothies and Angus beef hamburgers. It is also expanding its beverage offerings in certain markets with iced coffees, sweet tea and other items.

It is looking to add more fruits and vegetables to Happy Meals and other parts of the menu.

Executives said the company has a pipeline of products that may not reach the market for at least 18 to 24 months.

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