McDonald's CEO looks back on 21 years in SA | Fin24
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McDonald's CEO looks back on 21 years in SA

Nov 08 2016 19:16
Carin Smith

Cape Town - McDonald's South Africa celebrated its landmark 21st birthday in SA on Tuesday.

Since opening the first McDonald's in SA in November 1995, the company has grown to over 245 restaurants in all nine provinces. It employs more than 11 500 people across the country and 80% of all food served is produced by local suppliers. McDonald's was founded in the US in 1954. Globally it has 34 000 restaurants in 118 countries serving 50 million people worldwide every day.

It promptly declared it Big Mac Day and treated thousands of customers to a special R21 promotional meal.

CEO Greg Solomon told Fin24 that after 21 years the Big Mac is still South African customers' favourite burger on the menu. No wonder Big Mac sales make up about 20% of the business of McDonald's SA.

"It is very important to listen to consumers, but it is also important to be a maverick and set trends," said Solomon.

"Consumer habits are changing. Commuters do not want to sit in traffic so they leave earlier and go and have breakfast at, for instance, a McDonald's near their work place before going to the office."

He said the term "fast food" is becoming outdated. It is being replaced by the concept of "good food served fast".

"SA consumers want something fast, comfortable and good. They are savvy and like to be given a choice. Our brand is about food and customer experience," said Solomon.

"The facility is also important. We make it modern by using technology for ordering and collecting. We also create different zones for seating, some areas for groups, an area for children and more private seating areas. Customers also enjoy our free Wi-Fi."

READ: The secret to McDonald's success

Solomon's approach is one of "doing the same thing, but differently" - constantly evaluating and changing where needed. His other favourite saying is "you need to be the first - and if you are not the first, then you must be the best".

Another trend he pointed out is the growth in customers opting to use McDonald's delivery service. One year after the introduction of this service, it already makes up more than 5% of the total business of the company.

As for the very important health trend among consumers, Solomon said it is moving to being more an issue of responsibility. Customers just want to know what they are eating. They also want to know what a company does regarding the environment, for instance.

"In tough economic times rising food prices will offer a challenge in 2017, but McDonald's has a long term strategy as a value brand. That is how we have grown to the number of restaurants we have in SA. By the end of the year it should be at 251," said Solomon. About half are franchises and half owned by the company.

READ: Burgernomics: Big Mac Index shows rand should

Regarding franchisees, Solomon said the company looks for someone who is passionate, culturally aligned and with shared values.

"A franchisee must also understand how you make money in your business and about cash flows. You need an efficient structure with minimum waste and minimum deviation," he explained.

"One must understand the roles and responsibilities. Partnership is very important and for the parties (franchisor and franchisee) to be able to hold each other accountable."

As for expansion plans in the rest of Africa, Solomon said it is not currently the focus for the company. This is because of the opportunities it still sees in SA to be created before looking at the rest of the continent.

"At the same time it is not a matter of if, but when, regarding expansion in the rest of Africa. About 80% of the decision is about the supply chain as we want local suppliers," he said.

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mcdonald's  |  franchises  |  retail


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