McDonald's goes green

McDonald’s is a company on a mission. Tired of being held up as an example of corporate evil and greed, the fast food chain has been hitting out at critics with a series of environmental and social initiatives designed to prove that it cares.

Not content with just that, the company is also undergoing a makeover, redesigning some of its outlets in a way it hopes will revitalise the sites and attract more customers.

The group’s most recent initiative has been to turn its spent cooking oil into biodiesel fuel to power its vans in the United Kingdom.
Prior to that it swapped over to non-hydrogenated cooking oil. The menus have also changed to varying degrees over the past few years, with the introduction of sustainably grown coffee, organic milk and toasted deli sandwiches.

Greenpeace, which has worked with McDonald’s on making sure the soya they source from Brazil is produced by companies that do not destroy the rainforest, says the company has been progressive.

Pat Venditti, forest campaigner at the charity, says: “What we’ve seen is that they have taken a very good leadership role in terms of how they approach environmental issues.”

Others are not so sure of their initiatives. Sustain, the food and agriculture charity, is concerned about its advertising to children.

But the group is changing the appearance of its cafes. Some have been completely redone. A dark green or black facade replaces the bright red and yellow; armchairs, low-hung trendy lights, quirky designs and different types of seating areas are all an attempt to attract a more discerning customer.

A spokesperson for the company said: “We’re in a highly competitive market. It is important that we’re appealing to our customers and that, when they see a McDonald’s restaurant, it is inviting to them.”

To gauge the impact of the redesign, analysts point to the United States, where the programme began in 2003. Since then 6 500 restaurants have been changed.

McDonald’s will not give specific indications as to how redesigned restaurants have fared compared with the old-style ones but, overall, same store sales in the US seem to indicate that the makeover has worked. At the beginning of 2003, same store sales in the US, which compare sales of sites that have been open for a year or more, were down compared with the previous year. By April they had reversed that trend and, by September of that year, were up 10%. Same store sales have remained positive since then.

The same applies in Europe, where the big redesign was launched last year. In 2004 and 2005 there were some negative trends. But, since February last year, same store sales have been positive.

Mark Basham, a restaurants and hotels analyst at Standard & Poor’s, said: “The revamped menus, rebranded stores and more progressive stance on the environment have all had a positive influence on consumers.” The redesign “entices people to spend more time there and therefore more money, and encourages people to go at different times of the day than they normally would”.

Still, customers in the UK seem doubtful that the rebranding exercise will work. A lot of people concede that the restaurants look nicer, but argue that it still sells the same fast food that Morgan Spurlock vilified in his documentary Super Size Me.

Tim Lyley, a goldsmith from London, is one of the cynics. He says: “It’s just a marketing thing isn’t it? What McDonald’s do is so ingrained in people’s psyche that no amount of rebranding is going to change what people think about it.”

The group’s financial results seem to disprove that sentiment. In April the company reported an 11% rise in global first quarter sales to $5,5billion, and a 22% increase in net profits to $762,4million. This was put down to surging sales in Europe and strong demand for a new menu in the US.

John Holton, a partner at brand consultancy Figtree, said the power of rebranding should never be underestimated. He cites M&S as an example. The retailer began its rebranding exercise in 2000, which involved a revamp of its stores, a change in the clothing range and the use of Your M&S as an advertising slogan. It takes time for customers to change their opinions. “It’s only now that people are starting to say better things about M&S,” he said.—Â

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