Debating Room - McFun - For Sale - Search - What's New? - Mailing List
02/07/00 . Carla Power . Newsweek International . U.S.A.
Europeans love protesting against McDonald’s — almost as much as they enjoy eating there.
Millau, a small town in the south of France, was host last weekend to an anti-globalization fest billed as a “Seattle-sur-Tarn.” On the banks of a sleepy creek, the organizers had hoped to capture the spirit of last December’s tumultuous showdown over global trade in the American Northwest.
THEY DID THEIR BEST. Some 15,000 protesters showed up. Students strolled through the farmers’ market, farmers attended lectures on sustainable agriculture and everyone cheered when local farmer-activist Jose Bove and other members of his Peasant Confederation rode by in a hay wagon. Still, there was no particular reason for officials at the World Trade Organization in Geneva, or the International Monetary Fund in Washington, to fret. Indeed, there was cause for concern at only one of the world’s great globalization agencies—the one that bases itself in Oak Brook, Illinois, and runs a big school called Hamburger University right nearby.
The carnival in Millau marked the beginning of Bove’s trial on charges of trashing the local McDonald’s last August. Predictably, Bove relished the chance to argue once again that the world’s biggest restaurant chain is the unacceptable face of globalization, a purveyor of malbouffe , or “garbage food,” and an engine of cultural hegemony. It’s an argument that resonates with a wide cross section of Europeans, from unions to foodies, greens, children’s advocates and small-restaurant owners. Protests against McDonald’s are becoming increasingly familiar events in France, England, Germany and Italy, allying matrons in pearls worried about their property values with dreadlocked anarchists who despise capitalism. You might almost think Europeans hated McDonald’s, except for one thing: they ate $9. 6 billion worth of Big Macs, Grande Royales and fries last year. There are now 4,943 McDonald’s in Europe, and the company considers the market so promising, and so important to its growth, that—protests notwithstanding—it plans to push the number to about 6,000 by 2002.
Has company chairman Jack Greenberg inhaled too many griddle fumes? Bove would say yes. But a closer look shows a picture far more complex—one that’s rich in the paradoxes that define the whole phenomenon we’ve come to call globalization. For starters, while few companies appear as ubiquitous as McDonald’s, none can claim to be more locally owned. “We export opportunity, a great franchising system that is a dynamic catalyst for local entrepreneurship,” says spokesman Walt Riker. Those locally owned stores, in turn, are right in the thick of the economic and social changes now transforming, and sometimes infuriating, Europe. On a continent troubled by unemployment, McDonald’s provides 250,000 jobs—but often hears them derided as “McJobs.” In a region where most businessmen quietly long to ratchet back the power of the unions, McDonald’s owners aren’t shy about taking them on. And in a part of the world that’s having to learn to live a little faster, McDonald’s is popping up everywhere, offering service and convenience—but at the cost of steering local diets away from tradition and toward processed foods.
It’s more than a little reminiscent of McDonald’s experience in America. Back in the 1950s, a milk-shake-machine salesman named Ray Kroc bought out the McDonald brothers’ burger stand in California with the idea of reproducing it around the country. How? By getting ambitious locals to invest some capital and a lot of sweat equity. It’s the same in Europe today, where franchisees pay a flat fee (ranging from $20,000 to $45,000 or even more, depending on the location) and annual royalties to enter into a 20-year partnership with the McDonald’s Corp. McDonald’s still makes sure its owners are close to their markets; where Pizza Hut has a franchisee with 700 restaurants, McDonald’s biggest franchisee owns only 50. A few McDonald’s are directly run by the company, but most of its 4,943 European restaurants are run by 1,700 franchisees.
One is Philip Kempe, who comes from a Welsh farming family. Having decided to go into the restaurant business, he entered a McDonald’s training program and today owns three franchises. He is in one of his restaurants nearly every day. “It’s a little like farming, because it’s sort of a lifestyle thing rather than just being a job,” he says. Francesco Bazzucchi, a 57-year-old antiques restorer, knows the feeling. He decided he wanted to own a McDonald’s after visiting the restaurant near Rome’s Spanish Steps. “I was amazed by it,” he recalls. “The new technology, the idea of a big salad bar... It sparked my curiosity.” He’s just opened a restaurant in the Umbrian town of Assisi, designing it himself and incorporating antiques in the 75-year-old building. “My McDonald’s doesn’t seem like a McDonald’s,” he says proudly. “The food is McDonald’s, but that’s all.”
All franchisees are quick to stress their right to be in the neighborhood. “I feel I’m a Greek businessman,” says Thanos Tagaris, owner of two McDonald’s in Athens. “We’re no different from any Greek business.” The idea, explains European spokesman Riker, is that the franchisee “is Mr. McDonald’s in his community, on the job and in the restaurant.” While they have to meet company standards, the franchisees are responsible for hiring, buying equipment, advertising and sponsoring local community activities.
And, sometimes, for fighting some local battles. “They’re the worst employer in the food and restaurant sector,” says Hans-Jurgen Hinzer, of Germany’s Food and Gastronomy Union. The union says few McDonald’s grant workers all their legal rights, often skipping bonuses for night shifts, mandated breaks and the raises German workers are automatically awarded with seniority. McDonald’s franchises have fired dozens of union activists and workers’ representatives, the union says, claiming that managers earn bonuses if they keep their restaurants union-free—something the company denies. German labor courts are awash with suits against the company. The five-McDonald’s town of Dortmund has had 200 McDonald’s cases before its local court. Mohamed Boudih, a Dortmund University student who flipped burgers at a local franchise, was elected as a workers’ representative by other employees, most of them foreigners who speak little German. He says that when he complained to management last year that it was withholding pay raises it had agreed to, he was fired on a fabricated charge. He sued; McDonald’s denied wrongdoing, but the two sides reached a settlement.
The going gets tough sometimes. But McDonald’s goal is still to embed itself wherever it does business. The company sees itself as a good citizen, and can make some strong arguments to that effect. What got Jose Bove angry enough to attack Ronald McDonald last year was an American tariff slapped on the Roquefort cheese made in his region, a response to France’s insistence on restricting sales of American hormone-fed beef. Makes sense; if you’re mad about U.S. beef, who better to assault? Except that in France, Ronald happens to sell French beef. Of the foods used by McDonald’s France, 85 percent are bought from French sources; the other 15 percent come from elsewhere in Europe. The company is the largest single purchaser of French agricultural products.
That’s a fact McDonald’s tried hard to communicate after Bove wrecked the Millau restaurant. It took out full-page newspaper ads featuring models posed as Ugly Americans, complete with bulging stomachs, baseball bats and Stetsons. Those caricatures aren’t us, the copy explained—we’re “Born in the United States. Made in France.”
But that campaign didn’t quiet the critics any more than the local menu variations did. McDonald’s in Britain recently offered the Chicken McTikka to cater to the local penchant for Indian takeout. Before Easter, many Greeks avoid milk and meat, so McDonald’s Hellas developed McLent, or McSarakosti, a vegetarian option. McDonald’s in Italy pushes Pizza Mia, and German restaurants serve beer. Say its foes: that’s not localization, that’s marketing.
Or worse, encroachment—which has galvanized some Europeans into defending their local cuisines. The Slow Food International Movement, founded in Rome in 1986, now claims 60,000 members, holds conferences and protests fast food through education and information, according to vice president Giacomo Mojoli. “Slow Food is against the homogenization of taste,” he says.
The feeling that McDonald’s is supplanting local cuisine and customs can be a powerful one. A case in point is Hinchley Wood, a leafy little village in Surrey, England, where residents fought hard against a McDonald’s moving into the building that was once their pub. At a meeting in the local schoolhouse, McDonald’s representatives claimed they’d surveyed the community before buying the lease. Irate residents said they hadn’t been canvassed, and that they’d never use a McDonald’s. After angry interrogation from the crowd, the men from McDonald’s were finally forced to admit that the survey had been “conversations” with people who were at that time Hinchley Wood merchants. They refused to name them. The reason they knew a Hinchley Wood McDonald’s would be successful, they said, was by extrapolating sales figures from towns with similar demographic profiles. Last month, after villagers staged a 552-day vigil at the site to prevent McDonald’s from building there, McDonald’s returned the lease to the company that owned the pub.
In Eastern Europe, where the sizzle of capitalism is fresher and more alluring, such a rejection probably wouldn’t happen. When hyperinflation hit Bulgaria in 1997, many international businesses pulled out. Not McDonald’s. “There was a time when McDonald’s was our only active client,” recalls George Menev, head of the Sofia-based ad agency Favourite Vision. When Bulgarian salaries dropped as low as $20 a month, McDonald’s worked to keep burgers affordable. “In a situation like that, people will stop buying cars or clothes, but they will always buy food,” says Branislav Knezevic, who was then head of McDonald’s Bulgarian operations. “You have to show your commitment to the country by providing some little form of stability.”
It was back in 1988 that McDonald’s chose Hungary as the staging base for its Eastern European expansion. It went on to sink about $100 million into operations and infrastructure there. The company “took some hits early on,” says Knezevic, now managing director of McDonald’s Hungary. “But it’s paying off now.” The company has 64 percent of the country’s fast-food market. Last year sales topped $70.7 million, a 22 percent increase over 1998. “Many of the restaurants are franchises, with lots of supplies coming from domestic sources,” says Lasza Skultety, of Budapest’s Economic Research Institute. “In the end, it is Hungarian entrepreneurs that benefit.”
Of course, McDonald’s benefits, too—just as it does in the 118 other countries where it operates. Financially, the company’s becoming less American every year. And if it wants to satisfy Wall Street and keep growing, it must accelerate the trend. In 1999 nearly 62 percent of its revenues came from markets outside the United States. Europe provided about 40 percent of operating income, according to Salomon Smith Barney. In the United States, there’s a McDonald’s for every 22,000 people; in Europe, the ratio is one for every 66,000 people. Small wonder that of the 1,850 units expected to be built around the world this year, 90 percent of them will be outside the United States.
As it grows, McDonald’s is sure to keep stressing its local credentials and good works. London’s Millennium Dome houses not only Britain’s 1,000th McDonald’s but a project called “Our Town Story,” through which the company gave each local education authority .10,000 for schoolkids to put on a show about their town. Unlike their parents, the young performers at the Dome will never have known a world without a McDonald’s on Main Street. “In 20 or 30 years’ time, McDonald’s won’t seem foreign [to Europeans],” notes Mark Kalinowski, who follows the company for Salomon Smith Barney in New York. “People will have grown up with it.” Of course, by then some young Brit or Bulgarian business whiz raised on Happy Meals might be ready to take on McWorld. As any good entrepreneur knows, nothing lasts forever.
With Barbie Nadeau, Stefan Theil, Juliette Terzieff, Kitty Guckenberger and Toula Vlahou