McDonald's turned to counterbalance localization with Yum!

The world's largest fast food company counters localization against rival Yum!

In the spring, more than 700 McDonald's restaurants across China, more and more people have noticed that there is a different kind of menu on the menu: a ten-dollar package, with the exception of the smaller one, chips and corn It also added yoghurt that can be bought for two bucks, a beverage that most consumers in North China like.

Last year, McDonald's had promoted “rice burgers” on the Taiwan market with great fanfare – this localized burger was made from fried chicken or beef slices plus cabbage and lettuce, sandwiched between two pieces of baked and seasoned “ "Between rice cakes" used to account for 6% of overall sales in Taiwan - the difference is that this time McDonald's has been cautious when it comes to selling locally-colored products in mainland markets with similar taste requirements, except in some places. In addition to television advertising and in-store promotions, the promotion did not spread out on a large scale. “We need to understand the feelings of consumers for a while,” said a middle-tier company in the company in China.

But this can still be regarded as McDonald's efforts in the localization of products. Jim Skinner, the global CEO who took office last year, clearly stated in an interview with this magazine that he hopes to add more Chinese products in the future. The characteristics, and China's CEO Jeffrey Schwartz, said that product localization is the company's most important strategy.

Undoubtedly, this is also a change that must be made under pressure from opponents. In 2005, Yum!’s profit margin in China was 19%. According to analysts’ estimates, McDonald’s profit margin in China is only 10%-11%. In addition, McDonald's lags far behind its rivals in the number of restaurants. By the end of 2005, Yum! Brands had opened more than 1,500 restaurants in the country. McDonald's has only 735 restaurants so far. The former is still frenzied with the average speed of one day. See the October 2005 issue of “The Secret Formula of Yum! China”.

However, the industry’s general concern is whether McDonald's can regain its advantages by relying solely on product updates. “McDonald's needs to fully consider tactical adjustments in China, not just food,” said Liu Wei, chief consultant director of the integrated strategy consultancy. In his view, McDonald's did not even do enough in the localization of food. It only set up an "Asian taste research room" in Hong Kong, and there is no special research institute in the Mainland.

The answer given by Shi Lesheng, who took office in October last year, is that McDonald's has stepped up its efforts to make local innovations in food. On the other hand, franchising, procurement, channel construction, expansion tactics, and real estate tactics are more reflective of McDonald's core competition. The field of force continues its thinking at the headquarters. For example, it was not until 2003 that McDonald's began to allow franchising in China and trained people for a year and a half; it opened the first car restaurant in China last year; it planned for the opening of a new store around 2003. Buying the next storefront land and selling it after it has been revalued is an authentic American style. "We need to be authentic American style," he told Global Entrepreneur.

【shuffle card】

Starting from the beginning of this year, many McDonald's employees began to feel an increase in labor intensity. “There has never been a shift before, but now we can't take a rest on weekends,” said one insider. In his view, this was the result of the arrival of Xeroxen who had working experience at the McDonald's headquarters. After Shi Xensheng took office, he asked the company to step up its research on the market and respond quickly.

This was very different from his predecessor, Singaporean Chinese, Chen Bide’s style of work. Because of Chen’s investment background and temperament, he was under the strong assault of CEO Su Jing’ao in Yum! China’s China Region. At one point McDonald’s appeared to be at a loss before Chen Bide’s departure. The difference in the number of restaurants between McDonald's and KFC was already more than one fold, so that in May of last year, Jim Skinner unabashedly criticized the Chinese market for "fatigue."

McDonald's has also started its top-level changes in China. Almost all Chinese executives have been replaced by leaders from headquarters or other national markets. In June of last year, Guy Russo, CEO and managing director of McDonald's Australia, was transferred to Hong Kong to become the president of Greater China. In Hong Kong, he was responsible for more than 1,200 McDonald's restaurants in the mainland, Hong Kong, and Taiwan. At the same time, Gary Rosen, the former senior director of McDonald's global market, was also sent to Shanghai to serve as vice president and chief marketing officer in China.

Despite this, Skinner is not assured that in his plan, China is the key development market for the future, and McDonald's still needs a top management who can concentrate on developing the mainland China. So, Jim Skinner’s The right-hand assistant, senior vice president of the company Shi Lesheng also subsequently served as the CEO of China.

Unlike Chen Bide, Luo Shujia and Xerox obviously are more like "deterrence" troops. Both have more than 30 years of McDonald's work experience, and they all started at the bottom of the McDonald's restaurant and gradually climbed up to the ranks of the company's executives. - In the company's corporate culture, this is the standard "McDonald's" manager.

After his arrival, Shi Lesheng's first handwriting was structural adjustment and personnel adjustment. In the past, McDonald's was divided into two regions, North and South, in China. After Shi Lesheng took office, the market operations department was re-organized into four regions: East, South, North, and China. Followed by the re-shuffle of the heads of departments. In October last year, Shi Wenzhe, the former general manager of McDonald's Beijing, was officially resigned after just one year. In February of this year, the former chief executive of McDonald's China South China, Situ Yaoming, became the CEO of ELong. And Lai Linsheng, the North District Managing Director who has worked for McDonald's for more than a decade, has also left.

According to McDonald's insiders, in addition to these high-level changes, the position of director-level positions in the sub-districts of the region has also been replaced with new blood. Some managers from Hong Kong and Taiwan have been replaced by lower-paid local employees. From the end of last year to the present, the people who left from McDonald's “cannot count”, so that their internal employees joked that “they have exported a lot of excellent talents to the domestic business community.”

However, it is worth mentioning that although the personnel changes greatly, Xeroxen has also increased its emphasis on product localization. In his new structure, each region will have a 20% chance to adjust the menu according to local tastes. In the fall, the “rice hamburger”, which once defeated rivals in Taiwan for McDonald’s, will also be listed in the country. “In the future, we may sell sour soup in the northwestern provinces and sell seafood soup in the eastern cities”, Luo Kairui’s “Global Entrepreneurs”. Say.

【copy】

But on the other hand, in the eyes of people in the industry, the McDonald's “reverse localization” approach can put McDonald's copy of the US model in place in China.

In December 2005, a new McDonald's restaurant was opened in Dongguan, between Guangzhou and Hong Kong. Unlike the past, this restaurant was not selected in the bustling area but was located in the Dongguan-Shenzhen Expressway into the backbone of Dongguan City. Road. In addition to ordinary restaurant services, consumers can quickly buy a package if they do not want to get off the bus. At the same time, they can also surf the Internet for free. Parents can also watch the children play while drinking coffee. This is exactly what Xerox expects. The DriveThru restaurant.

In the United States, this type of restaurant, which allows drivers to buy food without having to get out of the car, is quite popular. In 2005, the “Drive-In” restaurant accounted for 60% of McDonald's total sales. In China, Xerox’s confidence is that with the rapid increase in car ownership, car culture is now rapidly developing in China. According to the data from the China Association of Automobile Manufacturers, in 2005, China’s auto sales were close to 6 million vehicles, which has surpassed Japan, becoming the second largest consumer of automobiles after the United States. This year, car sales are expected to continue to increase by 10%-15%.

McDonald's, who grows up, naturally wants to seize this opportunity, so much so that when the second company has to start business in the Shanghai Waigaoqiao Free Trade Zone, Luo Shujia, general manager of McDonald's Greater China, reluctantly sighs. "This is only the second in China. , It should have been the 102th. "However, the performance of "get fast" is not disappointing. It is reported that the sales of these stores have exceeded 40% of the original restaurants.

But can we copy the American model's "acceleration" to save McDonald's China performance? An industry insider who has worked for many years at Yum Sheng believes that although this is a good breakthrough point, if we look at the overall operation, the “get-to-speed” restaurant cannot solve substantive problems. Unlike U.S. society, McDonald's requirement for opening auto restaurants in China is more demanding on the external environment. In China's densely populated cities, the location of auto restaurants is more difficult. In addition to the requirements on site size and traffic volume, To examine the surrounding major residents and their income levels, "I would like to break through quickly at the number of stores, and I'm afraid it will be harder to exceed KFC," he said. In this regard, Xerox believes that as long as it is accepted by consumers, opening more stores should not be a problem.

In addition, Xerox also wanted to transplant more American experiences to China. In the United States, McDonald's is not just a fast food retailer selling burgers, it is also an out-of-the-ordinary real estate business. Among its tens of thousands of stores, 60% ownership belongs to McDonald's, through restaurant service technology and licensing, advertising effects and venue rental. In other ways, McDonald's will maximize the customer's interest in their real estate, and 90% of its total revenue comes from rent.

In China, most restaurants in McDonald's are rented, but according to insiders, several restaurants bought early in the market, such as Beijing’s Wantong store, have begun to make money, and Xerox hopes to buy more in the future. Many suitable properties are supporting the operation of its restaurants. “I am currently negotiating with some real estate developers and some private owners who own the land and hope to get the ideal open space directly from them,” said Luo Kairui. Shanghai’s “High Speed” restaurant in Shanghai Waigaoqiao and Dongguan was invested by McDonald’s to build a building. When Shanghai’s “drive” was opened, McDonald’s invited a number of real estate developers to visit it. It is said that the latter’s Positive reaction.

However, Xeroxen dared not take it lightly. Under the pressure of KFC, he had been present at McDonald's restaurants in the past six months. He had at least five days a week to get a first-line understanding of the market situation. “We have confidence in the future. Foot," he said.