New menus, improve services, advertising, opening new stores, closing others, and refurbishing others have propelled McDonald’s U.S. back into an active growth cycle after experiencing a slack period in 2003 and 2004 – U.S. sales have climbed for 40 straight months. Sales in Great Britain have not shown a similar movement. Sales at McDonald’s 1,235 British outlets have been slughish for years, and the reasons are numerous. New chain such as Yo! Sushi and Nando’s Chicken Restaurants, which features spicy Portuguese chicken, have outpaced McDonald’s. Operators such as U.S.-based Subway Restaurant are pulling in customers with fresh salads and sandwiches on foccacia bread. Starbucks has made McDonald’s outlets look sterile and out-of-date. And the 2001 scare over mad cow disease, along with concerns about rising obesity, make things worse.
In part because of lackluster performance in Great Britain, McDonald’s European operations- the second biggest market after America, responsible for about 30 percent of profits, have suffered. In 2005, European sales fell 0.7 percent, while U.S. sales grew 4.7 percent. Further, same-store sales for European restaurants open more than a year registeres a 3 percent decline.
To give you a flavor of what McDonald’s U.K. faces, here are observations about McDonald’s Britain.
COMMENTS FROM VARIOUS NEWS SOURCES
* A 24-year-old advertising sales representative in West London commented, “The McDonald’s where I work is really smart, with Internet access and everything, but I only go in there as a last resort.”
* “Twenty-three years ago, or thereabouts, I had my first McDonald’s. I was studying at Cambridge and a group of us drove to London to watch a football match. We stopped off at McDonald’s in the Strand and I experienced the joys of a Big Mac with fries, to go. It felt like the height of cool. I was from Cumbria, and McDonald’s, which came to this country only in 1974, hadn’t yet penetrated that far north. My friends were Londoners, hip, dead trendy. They had cars at university, they drove to see the capital’s smarter teams, and they ate at McDonald’s. “Recently, I popped into the same outlet in Strand and clearly, it’s not just fashion that shifts: my taste buds have altered too- either that or after two or three pints at a football ground, anything seems delicious. Eschewing the option- as most of its customers do- to go healthly and order a salad, I went for a traditional double cheeseburger. The burger bun tasted like cottonwood, the beef in the burger patty lacked texture. It was manufactured, processed and quick.”
* Some opine that like all empires, McDonald’s has had its day and is now on the slippery slope to oblivion. McDonald’s could go the way of Howard Johnson’s, another restaurant chain that once covered America but now has all but disappeared.
* Everything has been hurled at the company, from fears about contracting mad cow desease to two teenage girls suing the company for making them fat to a savagely critical best-selling book, Fast Food Nation (which revealed, among other things, that the beef in McDonald’s patties can come from up to 100 different cows) and a hit film, Super Size Me (whose maker, Morgan Spurlock, did nothing except eat at McDonald’s for a month with disastrous effects to his health, turning his liver into something approaching pate). The result: profits fell, earning per share were down, and the firm famous for its expansion was forced to close restaurants.
* A recently released documentary, called McLibel, reopened old wounds for McDonald’s. McLibel recounts the story behind a decade-long court battle- the longest in British history- that pitted McDonald’s against two Greenpeace activists whom the company accused of libel. McDonald’s sued (1994) five London-based Greenpeace activists after they distributed leaflets that asked, “What’s Wrong with McDonald’s?” Three pulled...