THE FRIDAY INTERVIEW:John Atherton, managing director of McDonald's Ireland
JOHN ATHERTON has seen graduate unemployment before, he tells me from across the table in a Grafton Street McDonald’s thronged with sundae-buying teenagers.
Growing up in the mining town of Barnsley, south Yorkshire, Atherton left Birmingham University during the Thatcherite gloom of 1982. With Britain’s manufacturing heritage on the cusp of near-total destruction, he was lured into the burgeoning service sector by no less iconic a force than the golden arches.
McDonald’s was a world away from the tradition whose death throes were playing out on the news, but it was there he applied for a position as a trainee manager.
“The miners’ strikes had been happening and it was a time of change. My mother would have wanted me to get a proper job, and a proper job meant working in a bank or becoming a teacher. The service sector wasn’t properly understood then. There was a lot of snobbishness around it,” says Atherton.
“There still is a lot of snobbishness around it,” interjects his communications manager.
“But our restaurant managers earn €40,000 to €60,000, plus benefits. It’s a serious job,” Atherton continues.
So seriously did he treat it that he rose through the ranks from restaurant manager to area manager in Birmingham, then moved to head office in London, where he helped to establish a customer service department and worked on new product development. Somewhere there probably is someone with the epitaph “the person who brought you the McFlurry” or similar but, disappointingly, Atherton won’t claim responsibility for introducing any one McDonald’s menu stalwart. He is rather keen on talking about McDonald’s Eurosaver menu, however, €1 for a hamburger and so on, and he attributes McDonald’s consistent footfall to the menu’s recent extension to 10 items (including the incongruous salads and something called a fruit bag).
“We sold 10,000 more salads this January than last January,” he says proudly, although there is also mention of this “obviously coming off a low base”.
For Atherton, it is the predictability of McDonald’s pricing that has served the chain well during the recession. It is, literally, as cheap as chips. When I ask him what he thinks of the significantly higher-priced “we are not McDonald’s” burger franchises, he notes that, wherever they go, whatever their price point, customers are “less tolerant of not getting value for money” than ever before.
“Businesses have got to be very careful if they’re cutting costs. They’ve got to make sure they’re cutting them as far away from the customer as possible.”
He’s not one for complaining about the minimum wage, either. McDonald’s pays more than the minimum wage. “If the minimum wage goes down, our wages will stay the same,” he promises.
But while the recession has attracted new customers to its restaurants, growth has been offset by a decline in revenue from regulars. As a result, like-for-like sales at McDonald’s restaurants in Ireland were flat last year. With the help of new store openings, turnover broke the €200 million mark for the first time – a result Atherton seems cautiously pleased with, given the food service market as a whole has slipped 10 per cent.
He is vague about why McDonald’s has chosen now to pay economic consultants Indecon to produce a report on the hamburger chain’s economic contribution to Ireland, simply saying that after 33 years in the State, the time was right. The Indecon report finds that McDonald’s 78 restaurants contribute almost €200 million to the economy, breaking down into a €91 million direct contribution to gross domestic product (GDP) and a further €108 million from indirect and multiplier effects.
Indecon notes that “caution is necessary” in relation to the numbers: “These estimates do not imply that, if these expenditures were to disappear from the economy, national income would fall by the same amount.”
In any case, McDonald’s will chip in a little bit more to Irish GDP when it creates 250 jobs at four new restaurants due to open in the final months of the year. These will be part of the new generation of “Scandinavian” themed restaurants: primary-coloured plastic is out, natural materials such as leather, wood and stone are in.
Customer numbers go up after restaurants undergo a “re-imaging”, according to Atherton. But he agrees that, eventually, the red-and-yellow McDonald’s interiors of old will make a comeback, retro-style. If McDonald’s doesn’t do it, somebody else will.
All existing restaurants will be refurbished along the new “natural” lines. The Grafton Street outlet where we meet will be the last one to undergo cosmetic surgery. The €1 million-plus rent on the premises – “a difficult number to swallow” – is “a barrier to refurbishment”.
Nevertheless, with a McCafé installed upfront and mahogany-esque panels on the walls, the franchise is already using interior decor tactics to attract more than just the lunchtime and post-pub crowds. Trade in the morning, traditionally a weak part of the day, is improving thanks to city workers who pick up a McLatte (just called a latte, sadly) with their WiFi. Coffee sales are up 35 per cent since the start of the year: “That’s a customer that we didn’t have before,” he says.
Still, at 4pm when we meet, the clientele is largely below working age. As we talk Eurosaver menus, boom and bust, and Atherton’s lifelong instinct to check Barnsley football club’s result every Saturday, a boy walks past with his eyes glued to a copy of the Potter-derived Percy Jackson the Lightning Thief, while a flatscreen plays up-tempo pop videos. There’s not a salad in sight.
Despite the best efforts of the students of Maynooth, the busiest of the four restaurants McDonald’s opened last year has proved to be Wexford, where the hitherto Big Mac-deprived residents created motorway tailbacks.
This year recruitment starts in July, with the first of the four outlets scheduled to open in Finglas’s Charlestown shopping centre in September.
The traffic is there, he says. In any case, McDonald’s ubiquity has been achieved – in Ireland’s at least – without taking stupid risks.
“We would rather grow incrementally than be knocked about by boom and bust.”
Atherton has two years left in a three-year contract before he flies off into the sunset. A McDonald’s lifer with 28 years’ service, he hopes his next position will be managing director of another territory. And while his career may be a long way off flipping burgers and shovelling fries, he does still sample the goods himself – at least twice a week.
ON THE RECORD
Name:John Atherton
Age:
49
Position:chief executive of McDonald's Restaurants of Ireland.
Why is he in the news: McDonalds has commissioned a study from economic consultants Indecon, which has found that it contributed almost €200 million to the Irish economy in 2008.
Background and education:From Barnsley, he has a degree in geography from Birmingham University. He was a trainee manager at McDonald's in the 1980s, then rose through the ranks.
Family:Lives in Sandymount, Dublin, with his wife.
A surprise:Likes watching Ireland and Leinster play rugby. "It's refreshing to have a winning team on your doorstep." But he couldn't bring himself to watch England's defeat to Ireland."
