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McDonald's Opens Restaurants in New Wal-Mart Stores

DES MOINES, Iowa - While McDonald's has scaled back its number of full-sized restaurants, the company is quietly opening scores of McDonald's inside new Wal-Mart Stores Inc. across the U.S.

Today McDonald's has a presence in about 700, or one-fourth, of the Wal-Mart Discount Stores and Supercenters in the country, and that figure is expected to grow significantly in coming months, according to Dow Jones newswires. Under current plans, McDonald's could open as many as 200 units in U.S. Wal-Marts next year -- twice the number of domestic stand-alone restaurants slated for 2003.

"We're very bullish on the concept," a McDonald's spokeswoman said Monday.

Wal-Mart competitors have also picked up on the idea of franchised fast-food in their biggest stores. Target Corp. said about half its 94 Super Targets feature Taco Bell Express and Pizza Hut Express food from Yum Brands Inc. In those cases, Target licenses the rights to serve the branded food, using its own personnel.

Meanwhile, Royal Ahold NV's Stop & Shop unit has an agreement to open full-service Boston Market restaurants in some of its bigger supermarkets. Boston Market is controlled by McDonald's.

In 1998 McDonald's and Wal-Mart put the brakes on their in-tandem expansion and McDonald's closed some underperforming restaurants in Wal-Marts. "We didn't grow for a period," a Wal-Mart spokesman confirmed.

One reason was that often the McDonald's counter was located at the back of the store, and many shoppers never got there. Some franchisees now suggest putting the restaurants near the front door instead, but that depends on a case-by-case analysis of the situation, a Wal-Mart spokesman said.

Although plans are believed to call for a McDonald's in most future Wal-Mart Supercenters as well as some of the chain's smaller discount stores, some Supercenters will open with Wal-Mart's in-house version of a fast-food operation, called Radio Grill. "The whole idea is what's right for the store and the customer," a Wal-Mart spokesman said.
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