McDonald’s Linda Buckley

McDonald's, the US fast food giant, is spending $800m on a facelift of its European restaurants. Linda Buckley, the chain's European CFO, suggests the makeover is working.

How will you know the strategy is working? What kind of measurables have you put in place?

Comparable sales are a key measure. We have had fantastic results for the past year and a half. For the year to June, for example, our comp sales were 7.9% — that was the highest number for a six-month period in a very long time. I think 15 years is the period we quoted. So we know that we’re doing very well in that regard.

We also watch returns very carefully. We have overall incremental returns, which measure everything going on in a restaurant. So it’s not tied specifically to a new decor — it also includes the contributions of the marketing programme, the new food on a menu, extended hours — all those elements together make up the results of a restaurant. We’re interested in seeing that the whole portfolio of initiatives is working well.

Why do you think American companies dominate the fast-food sector, even in Europe?

I can really only speak about what is driving our success. Through August, we have had 19 consecutive months of same-store sales growth. We strongly believe this is driven by focusing on what customers want. Our business units in Europe are aligned around upgrading the customer and employee experience in the restaurant, building brand transparency and focusing on local relevance.

Although we have an American heritage, we are quite local in the execution of our strategies. More than two-thirds of our restaurants are owned and operated by independent, local businessmen and women. Our country management is primarily local. We believe it is the knowledge of the local environment and customers that enables us to be successful.

But do you risk alienating your traditional customer base by bringing in new interiors and new menus?

I don’t think we do, based on the fact that where we started this re-imaging — first France and then Germany — those are in fact the countries that are delivering some of the best results. It seems clear to me that with the business results we’re getting, people are happy.

Has there been a fundamental shift in the fast-food business — such as increasing concern about the lack of healthy food choices — that has changed the way big fast-food companies such as McDonald’s are having to operate?

All companies, regardless of the industry, need to change with the times. In our industry, our customers are increasingly concerned about the nutrition and quality of their food. We understand the need to continue to improve in this area. We are continuously looking at ways to improve our offer in terms of the nutritional value of menu items and providing balanced choices to our customers. It’s about reformulation but also menu choices. For example, we’ve made changes to Happy Meals to include carrot sticks, fruit bags and apple compote, among other products. We’ve also moved to sustainable coffee and started a concerted programme of reducing the percentage of trans-fatty acids (TFAs) in the cooking oil we use across Europe by early 2008. There are some favourites, however, that we would never want to change as customers love them. McDonald’s meals can be enjoyed as part of a balanced diet.


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