McDonald's aggressively re-works its image
By Sonia Racy, O Estado de S. Paulo, 27/02/2005
McDonald's has suffered a major setback in the past three years, the target of campaigns against obesity that culminated with the release of the film Super Size Me, a sensation at the Sundance Festival in January 2004. The film showed its director, for a month, feeding exclusively on products offered by the fast-food chain. As if this were not enough, in April, the company lost its CEO, Jim Cataloupo, responsible for the beginning of a huge advertising campaign, which started in 2002, which aimed precisely at taking off the obesity problem from the consumption of fast foods. He was responsible for working on menus, adopting more light offers. It was successful. On the day of his death, McDonald's shares were quoted at twice what they were worth in April 2003. The fact is that, since then, the group has been working on its image aggressively, easing the crisis.
Invited to answer questions in this Sunday's column, Argentine Sergio Alonso, who assumed the presidency of McDonald's do Brasil in January 2004, precisely at the height of the crisis in the USA, does not talk about the film or about competitors who have conquered space in this time gap . But he admits that he came to Brazil with the mission of putting order in the house, amid disagreements with the franchisees. Here he tells a little about the changes in the chain in Brazil and in the world, about competition…
McDonald's had problems with its franchisees in Brazil. Were they resolved? Are. We have already closed agreements with several litigating franchisees, repurchasing the restaurants of those who wanted to leave the company, either to follow other professional paths or for other reasons. And negotiations continue. Today, we have 91 franchisees, which operate 148 brand restaurants, responsible, in 2004, for 32% of the company's revenue as a whole.
In the world, does the franchise system work differently from Brazil? No. The system is the same. The difference is in the participation of franchisees and the corporation in the number of restaurants. In Brazil, 27% of stores are franchised, while worldwide this figure reaches 80%. There are several reasons, but above all the regulatory framework for the franchise segment in Brazil. In fact, it is being discussed at the Sectorial Business Franchise Forum, an initiative of the federal government. The Forum's main proposal is the revision of the Franchise Law, which is out of date. The legal text needs to make the rights and duties of franchisees and franchisors very clear, which is not the case today.
How does Burger King's entry affect the company? Who are McDonald's main competitors in Brazil? In fact, our great adversary in Brazil is informality, which dominates no less than 70% of the outside dining sector. This informality reaches several levels and, as a result, those who do not pay taxes also do not register their employees. The same reasoning applies to the production chain of these establishments. If a company does not issue notes, it also does not require a note from its suppliers. Just to give you an idea, McDonald's collects about R $ 266 million a year in taxes and tax contributions.
Is there a way to change this situation? Yes, changing taxes. And a good example is the ICMS in the State of São Paulo, which was reduced to 3,2% in 2000. What happened? The contribution base was expanded, increasing the sector's revenue.
McDonald's is considered the most complete synonym for fast food and trash food. Today, you also offer lighter food and have launched campaigns related to healthy living and quality of life. Imposition of consumers? Yes, as well as the dimension that the issue of quality of life has had in recent years. At McDonald's, the planning of new products began two years ago, through testing of suppliers and quality of inputs. Today, the new salads are already a success. They arrived on the menu at the end of December last year and now, in January, they were breaking a record: 1 million salads were served in our restaurants in the country, 40% more than in the same period in 2004.
How does McDonald's guarantee quality by working with 100% outsourcing? In many ways. In Brazil, for example, the company encouraged three of its main suppliers to build, in São Paulo, a production and distribution complex, called Cidade do Alimento. It cost over US $ 70 million and was built by Braslo (meat), Martin-Brower (distribution) and FSB Foods (bread).
What is the company's revenue here? What percentage does this represent in the world turnover? The figures for 2004 were very close to R $ 1,9 billion, an expressive growth compared to 2003 revenues, when we obtained R $ 1,7 billion. The figures for 2004, worldwide, have not yet come out. I can say that the volume of sales to customers in 2003 was almost US $ 50 billion, recording a profit of US $ 1,471 billion.
How much of the fast-food market is dominated by McDonald's? In Brazil and in the world? Brazil is among the eight main markets of the company, having in front of it only First World countries like USA, Canada, Australia and Japan. The fact is that McDonald's is today the largest company in the segment of fast service restaurants in the world. We have 31.129 restaurants in 119 countries, where 48 million customers pass through each day.
Is there McDonald's in India? How to operate in a country where the cow is sacred? Just as in Brazil we have products such as the passion fruit McFruit, banana tart or cheese bread, in India we have developed a special menu. We do not sell products that use beef or pork. Meals based on other meats and vegetables are offered. The Indian Big Mac, for example, called Maharaja Mac, is prepared with two mutton hamburgers.
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