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Sat, May 11, 2002 - Page 19 News List

McDonald's quietly muscling in on the diet crowd

Seeking to leave part of its saturated-fat image behind it, the McDonald's Corp has begun investing in shops that carry healthier fare

By Vivian Chu  /  REUTERS , NEW YORK

British sandwich chain Pret A Manger prides itself on selling hand-made, natural food in modest portions that could suit a dieter's lunch menu.

So it comes as a bit of a shock for many patrons when they learn that the trendy restaurants with the French name that translates to "Ready to Eat" are partly owned by fast-food giant McDonald's Corp, better known for Big Macs than baguettes.

"No! I didn't know that," said Iris Ponce, her eyes wide with surprise as she finished eating lunch at one of Pret A Manger's nine Manhattan sandwich shops.

It's just one of a handful of smaller restaurant chains McDonald's has invested in that offers new fast-food eating concepts. And Ponce, a 35-year-old bank officer, doesn't seem like one of McDonald's traditional customers.

"My first reaction is `Oh no, not McDonald's.' Hearing that makes me question the quality of the food. But the sandwiches here are very fresh and good, so I'll come back," she said.

Ponce has chosen a tomato and brie sandwich, one of more than a dozen offerings ranging from chicken Caesar to egg florentine. There's not a burger in sight on the store's self-serve racks.

Many Americans share Ponce's weariness with hamburgers, french fries and other fattening fast food, a trend McDonald's seems to recognize as it struggles with slow growth in its traditional restaurants.

As part of its effort to find new growth, the company owns and operates some 650 Boston Market shops and 200 Donatos Pizzerias. It also owns a majority of Chipotle, a Mexican-food joint with nearly 200 US outlets.

Two weeks ago, McDonald's signed a joint venture agreement with Fazoli's, a fast-casual Italian restaurant. The company said its interest in Fazoli's, as with the other restaurants in its Partner Brands business, is to boost McDonald's sales.

"It's a wise decision for them to go out and find additional growth opportunities," said Robertson Stephens analyst Paul West. "It's a natural step for them, as they are still opening new restaurants around the world, but they're facing more limited growth in the US."

Passionate about food

For its part, Pret A Manger has won an undisclosed amount of financial backing to pay for its restaurant chain's growth, and the chance to work with the world's pioneer of fast-food retailing.

"We couldn't ask for a more experienced partner," said Pret's co-founder Sinclair Beecham.

Beecham, who started the chain with a friend 16 years ago and sold its one-third stake to McDonald's in February 2001, said that being backed by the world's No. 1 hamburger chain is not a liability.

"We have complete management control of the business," he said. "They'd suffocate us if they wanted to run us."

There are contrasts between the two, judging from their interior designs and menus. One offers a fast food staple known the world over, and the other serves the latest in sandwiches and wraps.

At the Pret A Manger that recently opened on 42nd Street in New York, rows of juices, sandwiches and sushi lined a self-serve, stainless steel refrigerated stand. Jazz and salsa music played overhead as people grabbed lunch before the 3:30pm close.

The trendy fast-food chain says it's "passionate about food."

As if to underscore its differences with traditional rivals like McDonald's, it says it avoids "obscure chemicals, additives and preservatives common to so much of the `prepared' and `fast' food on the market."

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