Day 037 - 14 Oct 94 - Page 17


     
     1        while Fujita kept the McDonald's System intact, some of
     2        the chain's international managing directors initially did
     3        not follow his lead and used their autonomy to make major
     4        changes in menu and store format that no franchisee could
     5        make in the United States.  In Australia, the menu was
     6        designed to cater to Australian tastes; as a result,
     7        Ritchie's initial units featured English-style fish and
     8        chips instead of the regular McDonald's Filet-O-Fish
     9        sandwich.  The biggest seller was not a hamburger but a
    10        fried chicken product that was unknown in McDonald's in
    11        the United States but at one time contributed thirty per
    12        cent of McDonald's sales in Australia.  And the most
    13        popular hamburger was one containing lettuce, tomato, and
    14        mayonnaise - the way most Australians prefer hamburgers.
    15        By contrast, the regular McDonald's hamburger - garnished
    16        with pickles, onions, ketchup, and mustard - accounted for
    17        less than 1 percent of sales.  Australians obviously had
    18        difficulty accepting McDonald's notion of putting pickles
    19        on all its regular hamburger products. 'We had pickles all
    20        over the store - sticking on the ceiling and the walls,'
    21        Ritchie says.  'If we put up a wall mural of Ronald
    22        McDonald, he would have pickles in his eyes by the end of
    23        the day.'
    24
    25        But gradually the Australian managers realized what Fujita
    26        had discovered early on:  McDonald's had better luck
    27        changing local eating habits than adapting its menu to fit
    28        them."  I emphasise that point.  "The sales of McDonald's
    29        units in Australia are now dominated by the same hamburger
    30        products as the chain delivers in the United States.
    31        Meanwhile, the fried chicken offering has recently been
    32        replaced by Chicken McNuggets, while the lettuce and
    33        tomato hamburger and fish and chips product were dropped
    34        from the menu.  And Ritchie now estimates that less than 5
    35        percent of his customers remove the pickles from their
    36        hamburgers.  The Australian president attributes that
    37        change to the influence McDonald's has on children, whose
    38        tastes are not yet biased against the American menu.  As
    39        they grew up, McDonald's succeeded in winning more
    40        customers over to the standard American menu, and when
    41        McDonald's Australia finally revoked the menu
    42        modifications it had made, its operation moved into the
    43        black after eight consecutive losing years."
    44
    45        Again, a very clearly depicted portrait of an organisation
    46        that initially tried traditional marketing strategy and
    47        tactics and failed and resorted to a strategy of
    48        subversion.
    49
    50        The next page is also worth pointing out; page 437; it is 
    51        the second complete paragraph from the top relating to 
    52        Germany.  I shall not read the whole paragraph.  I will 
    53        just pick it up because the same point is being made, but
    54        there is a quote here from a McDonald's executive; it is
    55        about halfway through the paragraph and begins:  "And
    56        McDonald's Germany, which failed to turn a profit in its
    57        first six years, earned $15 million pre-tax in 1985, more
    58        than double its pre-tax earnings in 1980. 'It seemed that
    59        any detour we made from the standard McDonald's did not
    60        work,' Rettenwender explains. 'We realised it was better

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