McDonald's said it planned to increase its capital spending on the mainland by 40 percent in 2011, but declined to give the value of the planned investment, Dow Jones Newswires reported.

"We're committed to China, changing the face of the brand to become a place where young consumers want to come and stay," Kenneth Chan, McDonald's chief executive in China, told reporters in Beijing on Wednesday.

Chan said the company also plans to remodel 80 percent of its existing restaurants, changing the red and yellow decor to a more relaxed, European-style bistro design.

McDonald's faces increased competition in China, where it trails KFC, owned by Yum! Brands Inc., which has 3,200 locations compared to about 1,100 McDonald's outlets.

"It took us 19 years to get to 1,000 stores," Chan said. "Now it's time to pick up the pace."

Half of the new restaurants will be drive-through outlets primarily in China's biggest cities such as Shanghai and Beijing, but Chan said the company will also move deeper into smaller cities.

KFC has benefited from its locations in China's lesser-developed cities, where rents are lower and there is less competition, analysts say.

McDonald's, which operates in 150 Chinese cities, lacks distribution networks that would allow the company to expand, Keith Siegner, a restaurant analyst for Credit Suisse, told the Wall Street Journal.

"There's a tremendous opportunity for McDonald's if they broaden out," Siegner said, adding that the company has sufficient capital to invest.

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