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McDonald's Looks for Profits From Original Store Design

THERE was an Elvis sighting last week in Manhattan Beach -- right under the Golden Arches.

The 50s throwback comes courtesy of Dick Blade, president of Blade Enterprises, a McDonald's franchise group. Faced with having to overhaul the 40-year-old location, Blade approached the fast-food chain about using an all-retro design.

That included an enlarged version of the original, Stanley C. Meston-designed stores, complete with red and white stripes, an inverted slant to the roofline and, of course, two huge golden arches buttressing the sides of the structure.

"I figured it would go well in Manhattan Beach, with all the nostalgia and surf culture," said Blade, who operates five other McDonald's in the South Bay.

The interior adheres more to '50s kitsch than the layout of the original, which had no interior seating. Inside, there's an elevated jukebox, curly-cue booths and seat dividers that look like enlarged 45 records.

Not to mention a life-size replica of The King, complete with guitar.

With last week's opening, McDonald's now has five retro-designed restaurants on the West Coast, the first of which was built in Sacramento in 1999, according to Jeanne Kemp, community affairs manager for McDonald's Los Angeles region. Ten more are slated to be built within the next two to three years.

Besides being different from the standard tile-and-brick stores, the boxier design of the retro stores allows for a larger cooking area. Kemp estimated the Manhattan Beach store's size to be 3,600 square feet, as compared to the 3,000-3,500 square feet for regular stores. She said retro stores are 20 percent more costly to build.

Douglas A. Christopher, an analyst at Crowell, Weedon & Co., views the approach as an effort by McDonald's to differentiate itself from the rest of the cluttered fast-food market. "The company's been emphasizing a back-to-basics strategy, making a McDonald's a nice place to go," said Christopher, adding, "the rest of the industry has really caught up with them."

It has been a rocky year for McDonald's Corp., whose franchisees own and operate about 80 percent of the company's 13,000 stores in the U.S. Overseas, fears over mad cow and hoof in mouth diseases slowed revenues. In the United States, per-store sales figures for the second quarter ended June 30 was down from a year ago.

McDonald's reported net income of $440.9 million for the three months ended June 30, down from $525.9 million in the like year-earlier period. Its stock was trading last week near $28 - 24 percent off its 52-week high of $35 in January.

Caught in a long-standing battle with Jack In The Box, Burger King and Carl's Jr., McDonald's is looking to stay competitive when it comes to atmosphere. In addition to retro-design stores, the company last March began testing a diner concept in Indiana.

Restaurant consultant Janet Lowder president of Rancho Palos Verdes-based Restaurant Management Service, said "focusing on atmosphere [is] going to do more for them than trying to compete with Jack In The Box and Burger King."

Crowd awaited opening

Whatever the motive, the move struck a chord with the Manhattan Beach crowd, at least on opening day. About 40 people were lined up in front of the restaurant for its 10:30 a.m. opening. The beach-going mood continued inside as Patsy Cline and Sly and the Family Stone boomed out of a jukebox.

Blade, whose company grosses about $13 million, figures the '50s-themed look will pay off in "above average" revenues, though he would not provide sales projections.

Building on the retro theme, Blade had a "'50s prices" promotion during the restaurant's first weekend of business, rolling back hamburger and cheeseburger prices to 15 cents and 20 cents, respectively.

Retro-feel restaurants are nothing new to the Los Angeles restaurant landscape. The 160-unit Orange County-based Johnny Rockets opened its first store on Melrose Avenue in 1986. The Wayne McAllister-designed Bob's Big Boy in Toluca Lake, which was designated a California State Point of Historic Interest in 1993, has been fully refurbished and is noted for its weekend carhop service. And Denny's, which was founded in Lakewood in 1954, has developed two diner-related concepts in the past four years.

McDonald's is the only one to build or rebuild restaurants using what is largely its original design. The last remaining original store, which was built in 1953, was restored in 1996 and sits next to a McDonald's Museum in Downey.

The retro trend is all a matter of demographics, according to consultant Don Avalier, president of A valier and Associates in Santa Clarita. While quick-service restaurants traditionally are geared toward a younger audience, a growing percentage of the population is over 50. Avalier views McDonald's redesigns as an effort to appeal to an older population.

Which suits Bob Grandfeldt fine. Waiting for the doors to open with his wife Jean, Grandfeldt spoke proudly of his long history in Southern California, noting that his first restaurant visits were to the Glendale Bob's Big Boy in 1935. Surveying the bright colors and balloons that marked the reopening, Grandfeldt said, "this used to be a sand pile."