LIMITED MCDONALD'S MENU STILL SELLS

ROSEANNE HARPER

OAK BROOK, Ill. -- McDonald's here has found that a limited menu and limited seating have far from hindered sales at its new scaled-down units.

With half the seating of a regular unit and a trimmed menu, the company's first McDonald's Express unit to be opened in New York is posting sales 40% over projections, its franchisee told SN. Sales at other Express units recently opened on Long Island are also at or above projections, he said.

"I was surprised. Cutting out some menu selections and offering less seating have had no way near the impact we thought they would," said Jim Lewis, vice president of Lewis Foods, Riverside, Conn., the corporation that owns and operates the New York City McDonald's Express, which is located at 42nd Street and Sixth Avenue.

Lewis Foods also operates six traditional McDonald's units in Manhattan.

The Express unit, opened last November, occupies 1,400 square feet. That compares with 3,000 to 5,000 square feet for a traditional McDonald's. There's seating to accommodate 32, compared with 60 or more at a traditional unit.

What can supermarkets learn from the success of these units? It's just one more confirmation that convenience is the driving force in sales of hot food, said Lewis Foods' marketing director David Hawthorne.

"The closer you get the product to the customer, the more you'll sell of it. People are not so concerned about a big choice on the menu. It's the convenience that generates the sales," he said.

While Hawthorne said he knew of no imminent plans to put Express units in supermarkets, he did say that the Express would be the type of McDonald's unit that would be best suited for an in-store location.

At the Express units, there are no quarter-pounders, fish sandwiches or shakes. Big Macs, Chicken McNuggets, salads and Happy Meals are still there, but space limitations for equipment require some menu-trimming. "People don't seem to mind. I've heard of no complaints about the menu. They know it's not a traditional unit because the sign outside is different, and most of the business is take-out," Lewis said. People get served a little faster than at traditional McDonald's units, Lewis said, because, for one thing, there are fewer steps involved. "The burgers are closer to access, for example."

The McDonald's Express concept is aimed at more fully penetrating densely populated areas with high real estate prices, Lewis said.

The express units are offered to franchisees of successful traditional units. While sales volume is about half that of a traditional unit, return on investment is a little higher, Lewis said. That's because of both lower startup costs and lower operational costs. For example, less air conditioning is needed for the smaller space.

In another new move, McDonald's franchisees in Manhattan -- Lewis among them -- are cooperating in a home-delivery service. Customers call a central number that routes the order to the nearest of 40 traditional units in New York City.

"That's something else we underestimated," Lewis said. "Home delivery is doing better than we had expected without even advertising it. I don't even know what the potential is. We'll begin to advertise the service next month."