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It's party time

There's an interesting piece in this week's Spike magazine about McDonalds, and it mentions childrens birthday parties as one key part of their business model. Having attended no less than two birthday parties in McDonalds this weekend (both in the same branch, as it happens) I feel well qualified to comment on this subject.

According to Cathy Holcombe (the Spike Business Editor), McDonalds charge HK$12 for each child that attends the party, on top of any food that is ordered. It's no surprise that the staff are very keen to persuade everyone to order food and drink during the party, and since the host (rather than the guests) pay the bill, they don't normally find it too difficult to get orders. The parents can throw a party without too much hassle or inconvenience, and even if your guests order fairly extravagantly the bill won't be excessive. Plus your child gets a whole pile of presents!

According to Spike, McDonalds hosted more than 17,000 parties in 2002, attended by more than 480,000 people. That's 27 per party, but (based on my observations) that probably only includes the children, so we may well be talking about over a million people (or more likely, a rather smaller number attending multiple parties!).

The economics of this are actually quite interesting. Each party lasts for an hour and a half, but the area is cleared in advance and people don't always leave promptly. If those tables would otherwise be occupied by customers, they could be losing business because each table could be occupied by several groups over a two hour period. However, McDonalds may not lose many customers as a result of the parties because people may take the food elsewhere to eat, or wait for a table to become available. One other factor is that several staff are allocated to look after the guests, taking food orders (of course) and organizing silly games for the kids (but perhaps not a big factor give the wages they pay!).

Alternatively, McDonalds may be making a long-term investment by holding the parties, and if they succeed in winning over young children then it could pay off handsomely over the longer term. My son certainly enjoyed the party, and was particularly happy to win a variety of small prizes, all heavily branded with McDonalds logos and product names. I think that the company can be fairly confident that he will be back again spending his pocket money and persuading his parents to dine at McDonalds.

Comments

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Cranial

There is no doubt that this same marketing strategy is heard thru the halls and boardroom of Jollibee HQ'S in the Philippines. In fact that includes, KFC, Wendy's, Burger King and other local brands like Chow King, and Greenwich who all offer the same parties. The bottom line is a parent has an easier time say "no" to themselves vice "no" to a begging, screaming child. It also explains why the Phillipines is the only country where a local brand, Jolliebee, out sells McDonalds.

PC POLD

Certainly, Mcdonald's has found a niche for itself as a party provider in HK. Given that the average flat size is, by western standards, nothing more than a large cupboard, hosting a kids party in one of them is not just impractical but impossible. Mcdonald's also assists school kids as an impromptu study room. Again with living space at a premium, kids find it for more practical to do their homework there than at home. The area is bright, clean and safe and they can chat to their friends for hours, all for the price of a small coke. Mcdonald's, I feel, also installs some basic western culinary values into HK when it comes down to service, cleanliness and politeness. Something sorely amiss for anybody who frequents local "Cha Chan Tengs". It's just a shame that the food they serve is so vile.

Ron

PC Pold,

Very good observations about relating the average house size with the Mc Donald's facility.

Yes, this could be one very important reason and it could make both the parent and child "feel good".

Very nice topic Chris.

Some years back, a place called "Take One" in Kowloon Tong used this strategy for kids. Well, actually their parents. I don't know whether they are still around, but their service outsmarted Mc Donald's. Especially the warm and huge environment.

Needless to say the place charged considerably much more than what Mc Donald's does. But it had good business.

Cheers!

mr tall

Chris, you're a trooper for getting through two of those parties in a single weekend! At least it was dire outdoors . . .

I'm getting myself psychologically prepared for these: Toddler Tall hasn't been to McD's yet; she saw a stuffed toy-version of a box of McD's french fries at her cousin's flat the other day and exclaimed 'Flowers!' Aaah, innocence. Mrs Tall and I are savoring the minutes until she catches on.

Your last paragraph is right on the mark. It seems like a can't-miss business strategy, doesn't it? McD's must be nearing market saturation here, so they have to be thinking about ways to maintain their position.

Chris

I don't know how I overlooked the obvious problem of small apartments, having lived in one myself with a baby (well, I regard less than 500 sq ft as small). It's natural for people to want to escape, and you certainly wouldn't want 20+ small children in the place!

I often wonder whether McDonalds, Delifrance, and the rest get annoyed with schoolkids spending hours in their restaurants after buying just one soft drink, but I suppose it's normally during the less busy times.

To be totally honest, I always said that I wouldn't let my children go to McDonalds, but I've now accepted that there isn't much I can do about it, and really there are plenty of other things to worry about! However, if I ever organize a party in McDonalds for my son, you have permission to shoot me.

ina

Hey Chris! I was wondering if you could email me the name of the article asap cos it sounds very interesting....Thanks! :o)

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