There's an interesting piece in this week's Spike magazine about McDonalds, and it mentions childrens birthday parties as one key part of their business model. Having attended no less than two birthday parties in McDonalds this weekend (both in the same branch, as it happens) I feel well qualified to comment on this subject.
According to Cathy Holcombe (the Spike Business Editor), McDonalds charge HK$12 for each child that attends the party, on top of any food that is ordered. It's no surprise that the staff are very keen to persuade everyone to order food and drink during the party, and since the host (rather than the guests) pay the bill, they don't normally find it too difficult to get orders. The parents can throw a party without too much hassle or inconvenience, and even if your guests order fairly extravagantly the bill won't be excessive. Plus your child gets a whole pile of presents!
According to Spike, McDonalds hosted more than 17,000 parties in 2002, attended by more than 480,000 people. That's 27 per party, but (based on my observations) that probably only includes the children, so we may well be talking about over a million people (or more likely, a rather smaller number attending multiple parties!).
The economics of this are actually quite interesting. Each party lasts for an hour and a half, but the area is cleared in advance and people don't always leave promptly. If those tables would otherwise be occupied by customers, they could be losing business because each table could be occupied by several groups over a two hour period. However, McDonalds may not lose many customers as a result of the parties because people may take the food elsewhere to eat, or wait for a table to become available. One other factor is that several staff are allocated to look after the guests, taking food orders (of course) and organizing silly games for the kids (but perhaps not a big factor give the wages they pay!).
Alternatively, McDonalds may be making a long-term investment by holding the parties, and if they succeed in winning over young children then it could pay off handsomely over the longer term. My son certainly enjoyed the party, and was particularly happy to win a variety of small prizes, all heavily branded with McDonalds logos and product names. I think that the company can be fairly confident that he will be back again spending his pocket money and persuading his parents to dine at McDonalds.