A $5 Billion Makeover for McDonald's

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Get ready for a McDonald's makeover. The Golden Arches are looking to class things up a bit this decade.

The fast-food franchise is planning to spend as much as $5 billion to remodel thousands of its restaurants in the next few years, Crain’s Chicago Business reports. These fixes will go well beyond just sprucing up the bathrooms or renaming menu items.

“In the next five years, McDonald's plans to spend billions of dollars to remodel thousands of U.S. restaurants with new features such as plasma TVs, lounge chairs and electric fireplaces,” according to Crain’s. The company will also add free Wi-Fi and “stone facades” to stores, and make practical improvements like widening drive-ins to two lanes.

Company executives are reportedly looking to “rebrand” McDonalds and give it more of a coffeehouse feel to compliment the new specialty coffee they’ve added to the menu. In the process, McDonalds hopes to attract new customers and boost total annual sales at each newly redone restaurant from $2.3 million on average to $3.1 million over the next four or five years.

However, McDonald’s (Stock Quote: MCD) may face some obstacles along the way. Crain’s reports that many of the McDonald’s restaurants are owned by smaller franchises. They might some extra convincing (and compensation) to undertake these alterations. And McDonald’s biggest challenge may not even be the money, but rather their notoriety. How do you rebrand one of the best known brands in the world?

“It’s about the food, not the décor,” Phil Lempert, a food marketing expert, said in an interview with MainStreet. “McDonald's has toyed with different spaces for decades. They need more than that.” According to Lempert, the best thing McDonald’s can do to change their image is to change their menu. “If they change the food and the beverages, the people will come.”

McDonald’s has already taken some steps towards this goal, rolling out premium products like their $4 Angus burger (now the most expensive item on the menu) and their specialty coffee. By comparison, other fast food competitors like KFC are diving deeper into gluttonous menu items like the Double Down sandwich.

As one analyst told Crain’s, "The restaurants can't just be clean anymore, and if McDonald's wants to boost its average check with more premium products, it has to have better-looking stores.” But even with these additions, will it ever really be possible for McDonald's to transform into a coffeehouse, or will it end up looking more like an imposter?

“It will never become a real coffee shop,” Lempert said. “But that could be good news. McDonald’s could be the new evolution of coffee shops, a place with high quality coffee and good prices.”

For the time being, there are some previews of what the next generation of McDonald’s might look like around the world. One location in the UK already offers free Wi-Fi and a “new variety of seating options. And then of course, there are a few fancy McDonald’s in the U.S. that come equipped with vinyl chairs and flat-screen TV’s.

What do you think? Could you see spending an hour or more hanging out in McDonald's the way you might in Starbucks, or would you just prefer to get your fast food and run?

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