The Revitalisation of McDonald’s Australia

VP Strategic FranchisingJoanne Taylor

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0

5

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1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 J an- 03

Sales TC

McDonald’s Performance History

Key Customer Insights

• “I grew up - McDonald’s didn’t”

• “The food, environment, service

is plastic and processed”

• “Maccas is for everyone else!”

Key Issues- Internal

• No business plan or planning culture• Lots of activity without purpose or direction• Growth through new restaurants• Functional silos & politics• Constrained by Operations culture/focus• Vision limited by tenure• Franchisees and Company not aligned• Little expectation of future success

Key Issues- External

• Unresponsive to customer needs

• Become a follower not a leader

• Increased direct /indirect competition

• Reduction in QSC

• Perceived and real food quality issues

• Perceived and real health/nutrition issues

• Obesity whipping boy

• Silence on issues equalled guilt

In November 2002 we set out on a mission to address key issues

“…doing the same things does not produce different results…”

180 Business Approach

OLDHomogenous Model

Attract people to McDonald’s

NEWHeterogeneous Model

Make McDonald’s

attractive to people

Look Inwards

BRAND VALUES

Look Outwards

‘Blueprint’ Objectives

• Fix the food

• Get relevant

• Become Australia’s favourite brand

‘Blueprint’ Imperatives

• Customer first

• System wide approach

• Focus- ‘Less is more’

• Zero tolerance

• Stay the course

Critical Actions- External

• Transparency- consumer & media

• One on one’s with opinion leaders

• Food: myth busting; quality stories; new options

• Advertising: new messages and tone of voice

• Website: interactive menu

• Change the restaurants: design & merchandising

TFA Free Oil

Espresso Coffee

Never Stop Playing TVC

Yagoona 1971Welcome to McDonald’s

Gosford West – NSW

Collingwood

Northland - VIC

Edgeworth – NSW

Lakehaven – NSW

Young - NSW

Happy Meal Choices

Heart Tick

Made for You

100% White Meat

PremiumChicken

McChickenChickenDippers

Angus Beef

QSC – The Core of McDonald’s

• New measurement technologies Improved physical layouts & service platformsStreamlined communication & simplified processesChanges to consulting practices

…and the results?

Who would have thought?

Maccas would become Australia’s largest retailer of ready to eat salads

Salads Plus = a $130 million brand

Who would have thought ?Maccas would be a main exhibit at the

Dieticians of Australia Convention

Who would have thought ?

A Macca’s CEO would be a key note speaker at a Kids Nutrition Seminar and on the Board of The Diabetes

Association of NSW?

moremoreofof

thisthis

Customer Insights

• “McDonald’s is definitely changing for the better…”

• “I used to associate McDonald’s with greasy burgers…now it’s a very different place…”

• “I feel a lot better about going to McDonald’s…since they changed the menu and started telling the truth…”

*Benchmark Research

Progress … not success

“ …Its clear to preferrers and non-preferrers alike that McDonald’s is changing; however it is regarded as evolutionary not revolutionary…

…they see McDonald’s as catching up with the dramatic shifts in informal eating behaviours of the past decade…”

*Benchmark Research

Sales & GC Comps

8.7

5.9

3.5

8.7

13.78

10.63

5.0

0.71.9

4.4

7.5

5.14.2

2.12.7

-2.6-0.9

0.6

-2.9

-6.8

-4.2

-10

-5

0

5

10

15

1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009

Sales GC's

Results

• 6th year of positive Comp Sales and GCs

• Average restaurant sales up over 47%

• Company & Licensee profits @ record levels

• Average restaurant value up

• Market share increasing

• Customer attitudes changing for the better

• Focus on sustainability

• Become a leader in CSR

• Continue to work with nutrition groups

• Ongoing support for community initiatives

• Help bridge the gap between education and industry

• Continuous improvements in QSC

• Bringing it all together

Moving Forward

Bringing it all together …

Long Term Growt

h

Focus on CustomersImprove QSC

Licensees as best practice

• Rewards, recognition and consequences

• Grow best practice Licensees

• Licensee development programs

• Recruitment and selection of the best new Licensees

• Licensee engagement

Licensees Leading the Charge