Customer is king, not the local health authority

Ground Floor: The news that the Mid-Western Health Board has formally objected to a new McDonald's restaurant in Ennis, Co Clare…

Ground Floor: The news that the Mid-Western Health Board has formally objected to a new McDonald's restaurant in Ennis, Co Clare, due to fears about the health of children in the community smacks of closing the stable door after the horse has not only bolted but been a champion racer and now gone to stud, writes Sheila O'Flanagan.

Oh, and it's "nanny state" gone mad too, of course, but we're so used to hearing pronouncements on how to live our lives by people who are in the "do as I say and not as I do" category that such advice tends to pass us by these days.

Leaving aside the sheer idiocy of objecting to one more fast-food outlet in a town that already has its fair share, the health board is (having slammed that stable door) opening a Pandora's box of ridiculous scenarios. Shut down video rental stores - we should be out exercising instead of watching movies. Shut down the cinemas because when you go to a film these days an obligatory part of the experience is buying a bucket of popcorn that would feed the children of Ennis for a week. And close down pubs because the term "beer belly" didn't just materialise out of nowhere.

McDonald's is an easy target for the food police and there are still potential law suits against it in the "it's not my fault I'm fat" American market. Not only that but anyone who's read Fast Food Nation has probably thought twice before ordering a Big Mac and fries. For a while it seemed that the corporation was in a serious decline and that the days of the golden arches were becoming numbered.

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However, things have improved for the corporation and the return on McDonald's shares over the past year has been an impressive 103.5 per cent while they're trading near their 52-week high. January sales were up 19 per cent in 2004 compared with 2003 and, led by strong performances in both the States and Europe, comparable sales for the restaurants on a worldwide basis show an increase of 10 per cent.

Part of the success must be due to the new advertising campaign with hot man of the moment, Justin Timberlake. Part of it is due to a shift in corporate strategy with the Plan to Win (which must send chills down the spine of everyone who hates big corporations!)

Jim Cantalupo, the chief executive, in an interview that was circulated to franchise holders last year, pointed out that the corporation has had a pretty sustained performance over the entire 50 years of its existence. Over the last few years, though, he acknowledged that it had "taken its eyes off the fries" and that a new strategy was needed.

Interestingly, Jim touches on an issue that's close to my heart when it comes to business expansion and that is that some of the targets that the corporation set itself in relation to growth were unrealistic.

As I've said previously, the drive towards expansion can sometimes mean that executives lose sight of their core business, and in the case of McDonald's it meant opening more and more outlets but not actually focusing on consumers or on costs.

These days the Plan to Win is not about more restaurants (except, obviously, in Ennis) - it's about positioning, re-investing in the stores and being in the right marketplace.

It's about improving what's already there. The clichés might make you want to curl up and die but the sentiment, regardless of the business, is right. Size isn't everything! The shareholders seem to agree and they're seeing the results of the shift in emphasis. Earnings per share were $0.10 compared with a loss of $0.27 for Q4 of 2002 while comparable sales increased 2.4 per cent compared with a decline of 2.1 per cent in 2002.

When it come to charges in relation to the health of his consumers, Jim goes on the offensive. If people were really worried about obesity, he proclaims, they wouldn't be taking lawsuits.

Presumably they'd be out there eating salads and taking exercise instead. McDonald's, he says, serve fewer than 1 per cent of the meals in the States and so an obese population isn't their problem.

The International Association of Consumer Food Organisations suggested that they might consider lowering the fat and cholesterol content of what they sell. The likelihood of that will, once again, depend on the pressures that consumers themselves bring to bear.

The McDonald's person in charge of checking out what they should be serving in the future is Eric Leininger (who previously worked for Kraft, AC Nielsen and Quaker Oats) and who has taken up a position as the head of the company's global business research. According to the press blurb, Eric will lead the charge to turn McDonald's into a company that "listens and learns from its customers as it strives to be their favourite place to eat".

There's pretty much nothing Eric could do or say to make it my favourite place to eat but I'm certainly not rushing to ban fast-food outlets on the basis that they should be serving tofu.

The Mid-Western Health Board has got it all wrong. Banning an industry isn't the way forward. When McDonald's took its eyes off the fries and stopped offering value for money, as well as sticking with an outdated menu that didn't reflect changing tastes, people took their business somewhere else.

While the new menus may not be my personal choice they mean alternatives for people who visit the restaurants (one of my friends says that the pasta is good, which sounds freaky for a burger joint! But it's a choice nonetheless).

But the most important thing is that the customer is the person who chooses, not the local health authority. If the customer elects to walk away, then all of the zealous words from Jim Cantalupo and the marketing zeal of Eric Leininger are for nothing.

And it won't really matter whether or not Justin Timberlake is lovin' it.