Bigger Bite of Britain for McDonald's

The Bullish Burger Master's Plan To Become One of Britain's Biggest Employers

by Alexander Garrett

The Observer; 5 May 1996; UK

Press Index

If there is one thing that McDonald's prizes itself upon, it is double-quick service, and last week the company excelled itself. Defying those who thought that B.S.E. would put the skids under its expansion, it announced that a dramatic plan to double its size in the UK would take place in five years instead of 10, making the burger company one of the biggest employers in the country.

Paul Preston, who started out managing McDonald's first UK restaurant in Woolwich 21 years ago, and is now the company's president and chief executive officer, failed even to mention the beef crisis in his annual review. He spoke instead of a 'record-breaking year' in 1995.

With after-tax profits roaring ahead at 53 per cent to 341 million, and plans to add a further 100 outlets to the current 650 in 1996, the McDonaldisation of the UK appears to be an unstoppable rollercoaster.

Mike Love, McDonald's head of communications, explained that the Golden Arches had not remained unscathed by the crisis in British beef: "Like everyone else, we are experiencing an affect on our sales, and beef sales are not anything like they were before 20 March". But he added:"We see this as term, and are confident it will be resolved soon."

Expansion is being stepped up, he says, because the demand is there.

Vegetarians and fast food critics, who allowed themselves a sliver schadenfraude when the BSE crisis broke, are unlikely to be whooping for joy at the news. But even Tory die-hards incensed by the company's stance on British beef will not fail to notice its contribution to employment.

If you include 7,500 people on the payroll of McDonald's franchises ,the burger chain employs 44,500 in the UK. It estimates that 5,000 new jobs will be created each year for at least the next five years, which will add up to almost 70,000 by the year 2001 - overtaking such giants as Marks & Spencer and British Gas.

With 650 restaurants, the company reckons ther is one for every 90,000 people in the UK, and says this will come down to one every 50,000 by the end of the century - and that number could easily double. After all, the United States has a Big Mac parlour for every 25,000 of its citizens and is thought to be far from saturated.

Meanwhile, the Chicken McNugget is reaching inot every area of our waking lives. Breaking out of its traditional stronghold in High Streets and shopping centres, McDonald's has been making deals enabling it to start up elsewhere.

Last year, it initiated an agreement with Welcome Break, which saw its first two restaurants open in motorway service areas. A separate deal with Stena has put a seaborne McDonald's aboard the high speed sea catamaran plying between Holyhead and Dun Laoghaire.

Another possibility is football grounds. The first McDonald's opened in a stadium last year at Anfield, home of Liverpool FC and Love says more are likely to follow. As a sponsor of the Premier League, the chain came up with the idea of introducing family enclosures.

This gives it a natural entree to Premiership clubs, and Love says discussions are taking place with several.

The basic idea, he explains, is that McDonald's will go where there are people. Airports, A-roads and railway stations are all high on the list, but an even bigger opportunity may be presented by selling Big Macs on trains - as it does in Germany and Switzerland.

Love does not reject the idea outright, and simply says: "That has been discussed in the past and it's sure to be suggested again."

McDonald's is so far ahead of the competition in the fast food stakes, it is hard to see how it can put a foot wrong. The no.2 chain, Burger King - owned by Grand Metropolitan - has only 380 restaurants, compared with McDonald's 650. No 3, Wimpy - a rump after Burger King bought it from United Biscuits and cherry picked the best sites - has 270.

For all its phenomenal success in the UK, the company still gives the impression of trying desperately hard to be liked. To this end, each year McDonald's publishes a 'fact-file' stuffed with information on its employment practices, its environmental policy, its charitable good works, and the nutritional breakdown of its products.

This years edition reveals, inter alia, that it served up a remarkable 46,000 tonnes of french fries, six milion gallons of milk and 450 million buns last year.

To say that McDonald's is sensitive about negative publicity would be an understatement. When a group of environmental campaigners published a leaflet in which McDonald's was accused of contributing to the destruction of the rainforests, the company embarked on a legal action that has become the UK's longest running libel case, universally dubbed McLibel.

One consequence is that observers may be a little guarded in their comments on the company nowadys. One retail analyst suggests that McDonald's may be achieving its rapid expansion by picking readily available property in less desirable 'secondary' high streets, but adds: "What they've demonstrated is simply that people want fast-food - they want instant meal solutions."

The one issue that is sensitive for McDonald's at the moment is that of British beef. The 350 million that went to UK farmers in 1995 will go in large part to continental producers this year, thanks to the company's decision to abandon the home based product on 23 March.

McDonald's is sticking by that decision, despite Thursday's announcement by Wimpy that it is going back on the menu. Wimpy spokesman Brian Crambac explained: "Being a British company, we only made the move to drop British beef reluctantly. But people's confidence has started to come back, and now that our own suppliers have got an audit trail back to the farm it demostrates that our product is as good as it can be."

McDonald's move to jettison British beef provoked some calls for a boycott, and undoubtedly dented the company's self-anointed shiny image as a flag flier for Britain. Whether it will do any lasting damage is another matter.

Love says: "We've always said that we'll listen to our customers, and when confidence is restored, then we'll go back. At the moment they're telling us that there's still considerable uncertainty about British beef."

Ronald
Rules
UK

Year Restaurants Staff Sales m
1974 1 72 0.025
1975 4 288 0.693
1976 7 504 3.0
1977 10 720 6.6
1978 25 1,800 14.0
1979 38 2,739 26.0
1980 57 3,278 40.0
1981 68 4,371 51.0
1982 96 6,171 67.0
1983 133 8,549 88.0
1984 165 10,606 112.0
1985 197 12,663 149.0
1986 231 14,849 194.0
1987 262 16,841 257.0
1988 303 19,477 318.5
1989 338 21,727 380.0
1990 381 24,491 441.0
1991 430 27,705 380.0
1992 472 31,373 578.0
1993 521 31,373 578.0
1994 577 33,070 720.0
1995 650 36,978 821.2


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