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Stopping the Rumour Mill…

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Stopping the Rumour Mill…

Stopping the Rumour Mill…

After reading his own obituary in a London daily, Oscar Wilde, still very much alive at that time, dryly remarked, Rumours about my recent demise are slightly exaggerated.It appears to us that McDonald’s may be well advised to issue a similar statement.

From time to time, rumours emerge to the effect that McDonald’s is struggling, not only in South Africa but globally as well. In reality, the global fast food market, after experiencing many years of rampant growth, suffered a bit of a downturn and ended the most recent year on a flat note. McDonald’s, on the other hand, were able to announce that on a global basis, their results for the past year are up by 3% in real terms. The South African operation performed even better, so much so that it has just celebrated its best quarter ever. They are understandably proud of this achievement but, being a people-oriented company, the fact that they were named Best company to work for pleased them even more.

Back to the rumour mill

McDonald’s South Africa’s announcement that they are considering the appointment of a development licensee added substance to the rumour that all is not well with the company; this is completely unfounded. After 14 years in the country, and with over 130 mostly thriving outlets to show for it, the company has simply taken a step back to review its strategy. Senior management had to decide what would be best for the brand over the next 10-20 years.

To grant the right applicant a development license is one of the options under consideration. This is not surprising because the business model has worked well for McDonald’s in other parts of the world. It is a little-known fact that globally, about 25% of McDonald’s operations utilise the development license model. As far as South Africa is concerned, no firm decision has been made but there is an excellent chance that McDonald’s will go the development license route.

Only time will tell. In the meantime, it’s all systems go for McDonald’s; they continue to expand, mostly through their network of contented franchisees who serve an ever-growing number of loyal McDonald’s fans and make lots of money in the process.

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