But McDonald’s growth story amidst the bloodbath on Wall Street has made people sit up and take note of the steely corporate behind the romantic, red and yellow sheen. And if the US recession has left these hamburger people unscathed, guess a slowdown in the Indian economy is cause for celebration? 4Ps B&M’s Angshuman Paul dives into the ketchup :-) Ronald McDonald is sitting calmly in the war-room of his headquarters at Oakbrook, a suburb west of Chicago. While his rivals are reeling under the impact of the recession that is taking a toll on most of Wall Street, the clown is thanking the investigative journalist Eric Schlosser for writing his bestseller Fast Food Nation a few years ago, which had hit McDonald’s where it had hurt the most – no, not their waistline, but the bottomline! Schlosser’s arguments against McDonaldization of America and the rest of the world (among other things he wrote that “wherever America’s fast food chains go, waistlines inevitably start expanding”) had caught the imagination of the public then, which until then had thought of burgers and fries as their manna from heaven. The hamburger chain’s profits dropped drastically between 2002-2003.
But that was then when they never got anything right! Today, it seems that they can do no wrong. Fast Food Nation and the damage it inflicted on their financials gave McD’s the fodder to change – their menu, image and more importantly their thinking – which is serving them well in these bad times. In the intervening years, not only did the burger company do away with super size burgers and include healthy meals to their menu, they also improved efficiencies, added the McCafe and McTreat chains to their portfolio and launched the I’m lovin’ It campaign. And they are still lovin’ it! When its contemporaries are taking a hit on their bottomlines, Mc’Ds is riding the wave with strong results for the third quarter and the year. Its sales in the US increased by 5% (not to mention a double digit growth in their operating income), even as Domino’s sales fell by 3% and Yum Brands started calling the Pizza Hut chain as one of its biggest challenges. The Pizza chain’s complaints: cash-strapped consumers are eating at home more often. Jim Skinner, the Global Chief Executive of McDonald’s, is not complaining though. After all, in the year ended 2008, McDonald’s recorded a revenue of $23,230 million as compared to rival Yum! Brand’s mere $10,416 million for the same period. Shares of McDonald’s gained nearly 6% last year, making the company one of only two in the Dow Jones industrial average whose share price rose in 2008 (when the stock market lost a third of its value). The other was Wal-Mart!
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Source :
IIPM Editorial, 2009
An Initiative of
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Malay Chaudhuri and
Arindam chaudhuri (
Renowned Management Guru and
Economist).
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