As part of our 2019 Brand Momentum report, Stone & River talked with McDonalds’ UK senior vice president and chief operations officer Jason Clark about the successes of the brand over the past 12 months and how it’s growing compared to other chains.
McDonald’s has done well both from a consumer perspective, but also a business perspective over the past year. What is driving McDonald’s growth at the moment?
Our growth has been building for the last decade, and we’re currently celebrating our 51st consecutive quarter of growth both from sales and guest count point of view, and our ‘turnaround story’ has evolved over the past 13 years. Most recently, it’s been due to investing significantly into our restaurants and customer experience through Experience of the Future (EOTF). This has been a considerable investment from us and our franchisees, somewhere in the region of £1bn. It’s covered all areas, from interior redesign through to increasing drive-thru capacity. Customers have responded to it incredibly well, and we’ve been able to significantly improve their experience. When someone comes into our restaurants today they’ll see self-order screens, wireless chargers, food made fresh to order for them and table service. Our kitchens have evolved so we’ve been able to add new products to the menu, as well as helping to improve our order accuracy. EOTF has allowed us to change people’s perceptions of McDonald’s in a lot of different ways – this better experience has certainly helped drive our growth in terms of both attracting new customers and keeping our current ones happy.
Why do you think businesses have had to adapt so quickly? What has changed in the consumer’s mindset in the past few years?
It’s tough for consumers. People are working more, and looking for more convenience, they’re time poor and want things when they want them, which is why we launched McDelivery, our home delivery service with Uber Eats, in 2017. But in addition to convenience, they want value for money, good service and quality food; we spend a lot of time listening to our customers to make sure we understand what they want from us.
To what extent does innovation feed into the key purchasing criteria for consumers in McDonald’s?
Most innovation is happening in digital to tap into that convenience factor that consumers are looking for – McDelivery, self-order screens and our My McDonald’s App are all examples of that, and again EOTF has created a basis to continue to innovate. Menu innovation is also important, however. Customers tell us that as well as their favourites, like the Big Mac, that they want healthier choices, and we’re able to provide more visibility of the breadth of our menu using our self-order screens. Rather than people defaulting to their usual order at the counter, they allow people a bit more time to look through our menu, and as a result, we’ve seen a significant growth in our wraps and side salads. Innovation is a big part of how we do business: we’re continually challenging ourselves in a lot of areas.
What steps do you take to ensure consistency of experience and brand across your franchised restaurants? What are the problems you encounter with the franchised model?
I’ve worked in McDonald’s for 30 years, and with franchisees for the last 15-16 years. We work very closely with our franchisees, as we do with our consumers – it’s all about partnership. Our franchisees commit to our business for 20 years: it’s a long-term relationship and they’re a big part of our local representation from a customer and supplier point of view. The billion-pound investment for EOTF comes from franchisees as well as McDonald’s, it’s a collective investment from both of us. We’ve got franchisees nationwide all experiencing different external factors, so it’s important we’re close to them and we listen to their feedback. We do listening sessions with franchisees three times a year, and that’s important to us for that two-way engagement. We don’t always get it right, but it’s about having a level of honesty with our franchisees when things don’t go right locally or centrally. It’s a different challenge running a franchised business, but the potential when you get it right is much more exciting, in my view. There are 200 franchisees in UK&I, and the level of ambition with our franchisees is very high. It gives us a great level of leadership to move forward with.
Do you think employee retention is an industry-wide problem, and what steps are McDonald’s taking to encourage people to want to work at McDonald’s?
I started working for McDonald's as a crew member on the front counter and in the kitchens and it’s an exciting place to work. For us as a business having great, engaging employees in the restaurants is really important, so investing in our people is really key.
Over the past few years, we’ve increased our starting hourly rates by 25%, we offer better options on uniform, a choice of flexible or fixed-term contracts – all of that is important; but we also focus on providing people with opportunities. What some people don’t realise is the breadth of role at McDonald’s – in our restaurants we have a range of roles from our hospitality focussed employees, we call them our Customer Experience Leads and they do just that, create an even better experience for people that come through our doors; to shift managers and business managers; so there’s a lot of opportunity to progress. But we also understand that some people will just work for us for a summer while they’re at college.
Turnover has decreased significantly over the last five years, and that’s supported and led by franchisees locally. Being able to hold on to good people is a challenge industry-wide in the service industry as a whole. It’s a constant challenge but we’re always striving to get better at. It hasn’t changed since I was a crew member but I think operators are more aware of it than they ever have been.
Are there any words of warning you’d give to QSR / restaurant businesses trying to grow in current conditions?
It’s very tough and a very competitive market place at the moment, and it’s easy to be distracted – so my advice would be to focus on your customer, it sounds so simple but it’s key. When you’re growing, it’s very easy to overlook customer experience and their feedback, which we certainly experienced that when we grew a lot through the 90s. You’ve got to take time to understand what customers are saying about your restaurants and make improvements off the back of that. It’s a tough environment to operate in, but never overlook your customer feedback – they’re the critical success factor.
Burger King vs McDonald’s, there’s a huge gap in performance. Is it location strategy? McDonald’s are in nice quality, high footfall, premium areas, Burger King less so. Does this impact the perception of quality among consumers?
I don’t actually think there’s too much difference in terms of location, though location is, of course, an important factor. The majority of our restaurants are in retail parks, or travel routes on A roads, and a lot of high street locations. If you saw our portfolio, you’d be surprised at how similar it is to larger QSRs.
For me, it all goes back to continually investing in restaurants and your people, and that’s why I think we’ve been successful.
You can download the full CGA | Stone & River Brand Momentum report here.