021032 McDonald's Tests New '3'n1' Restaurant

Oak Brook, IL - Fast-food giant McDonald's Corp. said said it opened a new multi- concept "McDonald's 3'n1" restaurant, its latest bid to break tradition with its regular hamburger outlets and develop new ways to drive up U.S. sales.

The test restaurant, housed under the roof of a regular McDonald's, opened a week ago in Lincoln, Nebraska. It offers a traditional McDonald's menu as well as a menu for hot- and-cold sandwiches and platter offerings, and one for ice cream and bakery items, Jack Greenberg, the company's chief executive, told investors.

"It's just one of the things people are working on and it creates a very strong pipeline for innovations," Greenberg said during a conference call to discuss McDonald's quarterly earnings.

In its first week of operation, the restaurant generated more than $70,000 in sales, Greenberg said.

The new restaurant was designed to cater to adult and family-eating occasions, McDonald's said in press materials. It offers table service and allows customers to order from a special red phone at their table. The restaurant also features a take-out area for ordering and pick-up. Customers can also phone their orders in advance.

In addition to regular McDonald's fare like Big Mac and Quarter Pounder hamburgers, the menu includes items like New York Reuben sandwiches, Chicken Parmigiana, Meatloaf, carrot cake, ice cream sundaes and cinnamon rolls.

BRANCHING OUT

Faced with an over-saturated domestic hamburger market, McDonald's in recent years has been progressively branching out beyond its mainstay chain.

"They experiment with lots of things," said Bear Stearns analyst Joe Buckley. "There is a sense of excitement to new and different things." He added that it was much too early to judge whether the "3'n1" concept appeared viable to expand.

In addition to nearly 30,000 hamburger outlets worldwide, Oak Brook, Illinois-based McDonald's operates the Boston Market homestyle chicken chain, Chipotle Mexican Grill and Donatos pizzerias, that make up about 1,077 non-hamburger outlets in total.

It also has a stake in upscale British sandwich chain Pret a Manger. In September Greenberg disclosed plans to expand a test of a new diner-style restaurant concept that offers homestyle foods like meatloaf and chicken fried steak in addition to McDonald's standard offerings.

McDonald's posted a decline in quarterly earnings on Tuesday, but its shares rose 65 cents, or 3.5% higher, to close at $18.95 in New York Stock Exchange trading, as investors cheered the company's plan to cut restaurant openings and boost spending on existing units.

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