Do Business Well

McDonald’s executives are fond of saying that “at McDonalds, the reality is bigger than the dream”. Based on the company’s performance since its arrival in South Africa in 1995, one cannot help but agree. Since its South African debut in November 1995, McDonald’s hasn’t looked back and less than five years on, even the most optimistic forecasts have been exceeded by a considerable margin. By the end of 2000, an impressive 96 restaurants were up and running.

International recognition

This rapid growth led to South Africa being named the fastest-growing new market within the highly competitive McDonald’s stable worldwide in 1998. Already, a direct investment of R750 million has created direct employment for over 6 000 people. This number, though impressive in itself, would be significantly higher, were employment opportunities created at supplier level taken into account. Firm plans for further expansion are in place and before long, 250 restaurants will cover the length and breadth of our country.

Model franchisor

McDonald’s impact on South Africa’s franchise scene is equally impressive. Offering franchises in the US since 1955, McDonald’s occupies a place of honour among franchise pioneers. Unlike some other “golden oldies” that impressed initially but lost their focus over time, McDonald’s has never been known to rest on its laurels. Expansion continues at a breathtaking pace and franchising forms the backbone of the company’s successful strategy.

In fact, McDonald’s franchise package turns the franchising credo, “to be in business for yourself but not by yourself” into reality. The company’s franchisee support infrastructure has become a legend in its own right and there is widespread agreement that a McDonald’s franchise offers self-employment with the advantage of a safety net.

McDonald’s worldwide franchising structure has been recognized by distinguished franchise practitioners and writers, both globally and locally and, needless to say, McDonald’s is a respected member of FASA.

The extent to which McDonald’s has the welfare of its franchisees at heart is demonstrated by its South African expansion strategy. Currently, McDonald’s operates over 30 000 restaurants, located throughout 120 countries worldwide. The number is growing literally by the day and an analysis of ownership would reveal that at global level, 70% of restaurants are owned by franchisees. Peter Moyanga, Franchising Manager, qualified that the percentage of franchisee ownership in South Africa is 42%. “However, our ultimate goal is to follow the global trend and to this end many franchisee applicants are currently in the system undergoing training and soon to be awarded their own restaurants“.

Stringent selection criteria

Attractive as it may seem at first glance to become a McDonald’s franchisee, it is not a career path for the fainthearted. Ignoring costs fora moment, other hurdles remain. Selection criteria are stringent, training is exhaustive and exhausting and those who qualify will be expected to adhere to uncompromising standards of quality at every conceivable level for as long as they operate their business under the famous golden arches.

The potential rewards are equally great, however, leading to a never-ending stream of enquiries from franchisee-hopefuls. But while McDonald’s has never been short of applicants for its franchise opportunities, the search for individuals who display the makings of a winning franchisee is an ongoing process. Selection criteria are clear-cut and include the need for financial stability. However, various schemes are in place to assist those who cannot raise the investment in full, provided they achieve above average ratings in all other respects.

QSC&V

Before discussing the attributes of a prospective McDonald’s operator, let us look at the reasons for McDonald’s global success - represented by the letters QSC&V. For the uninitiated, this combination stands for Quality, Service, Cleanliness and Value.

1. Attention to food quality is of paramount importance at McDonald’s. For example, only prime beef is used and over 40 quality checks are conducted before a batch is considered fit to go into a Big Mac.
2. McDonald’s is all about fast, friendly and reliable service. It is this service standard that sets the company apart from its many competitors.
3. Every McDonald’s restaurant offers its customers a clean, comfortable and pleasant environment. This continuing obsession with cleanliness extends well beyond the traditional customer areas, incorporating restrooms, kitchens and even the parking lot.
4. If compared item for item, McDonald’s offerings prove to be the best value for money available anywhere, on a regular basis and prepared to uniform standards.

Partnership approach

McDonald’s sees business as a three-way partnership between itself, its franchisees and its suppliers. Suppliers are carefully selected and, once on board, treated with loyalty and respect. Ongoing quality audits ensure, however, that the McDonald’s promise is never compromised.

Franchisees form an essential part of McDonald’s business plan and it should come as no surprise that its careful selection and training is taken extremely seriously. The main portion of training takes place in South Africa, but culminates in a 10-day visit to McDonald’s famous Hamburger Academy in Oak Brook, Illinois. Trainees are expected to attain an average pass rate of 90%, for, as Moyanga puts it, “how can you expect a franchisee to give 100% service to customers if he performs below 90% during training?”

Franchisee selection criteria

The following qualifications, among others, are essential prerequisites for consideration as a McDonald’s franchisee:

• Entrepreneurial spirit and a burning desire to succeed.
• Demonstrated integrity combined with strong business ethics.
• Sound business skills, with special emphasis on people-handling and sales-building skills.
• Willingness to devote full time and best efforts to the hands-on operation of the franchise, coupled with a readiness to relocate if necessary.

Strong penchant for action linked to a willingness to accept responsibility and an ability to make decisions within the framework of the proven systems and procedures that are the cornerstone of McDonald’s world-wide uniformity and ongoing success.

The above is merely an attempt to describe the business side of the relationship, but there is more. Those who are accepted as franchisees become part of an international family, linked together by their dedication to QSC&V and their unfaltering pride in serving beneath the golden arches. It is precisely this spirit that makes McDonald’s so special.

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