I went into McDonalds at the weekend and was amused to see that on the one hand they are promoting their new range of salads, yoghurts, tacos and "healthy" stuff, whilst on the other hand they are offering the 'supersize' option that was withdrawn in the States following some adverse publicity related to the fact that eating large quantities of unhealthy food makes you, er, unhealthy.
This week's Economist has a special report about McDonald's makeover. Last time I read about the company it was all about their problems, but it seems that the new management have turned things round:
Remarkably, McDonald's has turned itself into the world's biggest seller of salads and its business is flourishing again. Yet despite all of its new lettuce, free-range eggs, bottled water and yoghurt parfaits, success remains, at least for now, all about burgers.
However, the salads and other new menu items do seem to be making a difference
The average sale in a McDonald's is just under $5. Typically what might happen is a mother comes in, buys her children a Happy Meal, and herself just a coffee. Now that salads and other lighter options have been added to the menu, many of those mothers now buy themselves a meal too, lifting the order value to around $12. The lighter options also encourage existing customers to come back more often because there is a greater variety of things to eat. Nevertheless, for now, the Big Mac remains the most popular item worldwide.
McDonalds has also tried diversifying:
In 2001 McDonald's also acquired a minority stake in London-based Pret A Manger, a relatively upmarket coffee, sandwich and salads chain that has done well in Britain and is expanding overseas, with mixed results so far. McDonald's management are guarded about what they intend to do with such investments. But clearly they provide a hedge against the future, just in case existing McDonald's sites needed to be replaced with something radically different.
I had assumed that Pret would have packed up and left Hong Kong by now, but apparently they are opening new outlets - there was a story in the SCMP a couple of weeks ago about another sandwich shop owner who was very indignant when the landlord refused to renew his lease and installed Pret in its place. I was quite a fan of Pret when I worked in London, but in Hong Kong terms their sandwiches do seem over-priced. They seem to be struggling to establish themselves here, and so far I think they only have 6 or 7 outlets.
McDonalds were experimenting with a new format in a few of their stores in Hong Kong, selling sandwiches and cakes from a separate counter. I think that format may have been abandoned, but I guess they are serious about diversifying. More from The Economist:
...the signs are that McDonald's is getting serious about sandwiches. Their experimental “Oven Selects” range, freshly made and toasted to order, is now going on trial at some 400 restaurants in America. If the sandwiches, which will sell for $4 each (relatively expensive for McDonald's), are a hit, they could become a global product.
Moving into the sandwich business means that McDonald's will compete more directly with the likes of chains such as Subway, and against countless corner delis and supermarkets. “Sandwiches outsell hamburgers by ten to one,” says Russ Smyth, president of McDonald's Europe. “So there is a great opportunity here.”
Although Big Macs and Happy Meals continue to be the core of McDonalds business, it does seem that they are getting a bit smarter rather than relying too much on the old familiar staples. Perhaps I could be tempted to try a salad the next I am forced to buy a Happy Meal, so I think they are on to something. However, it will take more than that to convince me that going into McDonalds could be a pleasurable experience!