The Burger Story

If you work just for money, you'll never make it, but if you love what you're doing and you always put the customer first, success will be yours - Ray Kroc, Founder, McDonalds Brand History and the Birth of the Franchising Industry Two brothers from New Hampshire, Richard and Maurice McDonald came to make a career in Hollywood and sadly ended up as owners of a drive-in restaurant in San Bernardino, fifty-five miles east of Los Angeles. In the year 1954, a milk-shake machine salesman, Raymond Kroc found that one of his clients the McDonalds had purchased eight multimixers! This was quite astonishing as each mixer had the capacity to mix five shakes in one go and generally people purchased just one or two. Curiosity got the better of him and he trekked to San Bernardino to see the people who needed forty shakes all in a go. He was amazed at what he saw at the little drive-in restaurant a large number of people were being served their orders of packaged foods in less than 60 seconds! The efficiency with which the little restaurant functioned by selling food at incredibly low prices set him thinking about a chain of restaurants. The next day Kroc talked the brothers into a deal which allowed him to sell McDonalds franchises for a price of $950. In return Kroc would keep 1.4% of all sales and the brothers would get 0.5% back. Soon the first link in the McDonalds chain was born in Des Plaines, Illinois on April 15, 1955. At an age when most people are looking ahead to retirement and a relaxed life, Ray Kroc looked for opportunities, took risks and worked towards success. From the very beginning Rays energy and vision have formed the foundation of the McDonalds business. Brand McDonalds Not Selling a Burger Ray's true genius was taking the unique concept developed by the McDonald brothers and creating a system based on partnerships that he expanded to restaurants throughout the country and the world. From the very start, Ray realized that he had to have a process in place to make it succeed. Hence, he emphasized on precision to achieve efficiency and delved into setting up an operating service system that would give the same quantity and quality of service to people in any of its outlets anywhere in the country that too at the same prices. Ray aimed to achieve recurring business through systems competence and not just the quality of a single store. Evidently Kroc was subliminally selling a service and not a product (burger) - thereby giving birth to the franchising industry!

The Real Estate Strategy that Succeeded Around the 1960s, there were numerous franchises and the chains restaurants had sales up to $75 million. But despite this, the McDonalds corporate earning turned out to be just $159,000, headed towards insolvency. Apart from this, Kroc was also constantly facing difficulties from the McDonald brothers. They did not meet his precision standards and also sold off a McDonald franchise to a competitor in Cook County, Illinois. All of this enraged Kroc to the extent that he wanted to run the venture all by himself. But unfortunately he could do nothing as he realized the importance commanded by the brand name McDonald among consumers. Unable to expand and buried in debt, Kroc was in a quandary. But his employee, Harry Sonneborn had a solution - he suggested that McDonalds should purchase probable sites and then lease to franchisees at a particular rate. The franchisees would have to pay a particular rate or a certain percentage of sales as rent. Thus, as the sales increased, the company would collect more rent. This strategy worked and also allowed Kroc to control the franchisees ensuring efficiency through corporate policies. The company went public on April 15, 1965, ten years after the first outlet was opened. Through widespread advertising and fast growth, McDonalds soon became the largest fast-food chain in America. But Kroc felt that the company must expand further in order to survive. So, he embarked on a project to introduce McDonalds internationally. In 1971, McDonalds was introduced in Japan and Germany; and later in 1977 in Europe and Asia. McDonalds India Introducing the Fast Food & Burger Concept While McDonalds internationally was renowned for its Hamburgers, in India, when McDonalds decided to launch, the biggest challenge was to be able to cater to the local tastes and preferences, while maintaining its international USP of QSC&V (Quality, Service, Cleanliness & Value) and sustain the image of a Family Restaurant. Six years prior to the opening of its first restaurant in India, McDonald's and its international supplier partners worked together with local Indian Companies to develop products that met McDonald's rigorous quality standards. These standards also had to strictly adhere to Indian Government regulations on food, health and hygiene. Finally, in mid-nineties, McDonalds opened its doors to the Indian audience. The first ever Golden Arches was unveiled in India on October 13, 1996 in Delhi. Within a span of just 8 days the second restaurant in India and the first ever in Mumbai was launched at Linking Road, Bandra on October 21st. While introducing a complete new taste for an Indian palate, they also launched into the Indian market a completely new way of serving (QSR Quick Service Restaurants) and eating quick and tasty food.

Localization & Standardization: McDonald's success worldwide has been attributed to the Think Global, Act Local and Sell like a Retailer philosophy. McDonalds followed this international mantra while opening doors to the Indian subcontinent. With respect to the cultural and traditional sentiments, not only did McDonalds not serve its most popular product The BIGMAC (a beef burger) but also developed an egg-less mayonnaise for the first time in the worldwide system. To suit the Indian palette, the McAloo Tikki burger, Veg. Pizza McPuff and Chicken McGrill burger were among other offerings that were formulated and introduced using spices favored by Indians. Furthermore, each restaurant kitchen was designed to maintain separate Vegetarian and Non-Vegetarian food counters. Brand Communication: The starting point was to clearly change the consumer perceptions from foreign, American, not knowing what to expect, discomfort to new/different to Indian, values families and culture, comfortable and easy. In short a friendly place where families would love to enjoy and have a special time. However, the onus was to consistently build and protect the brand while persistently committed to fundamentals of QSC&V (Quality, Service, Cleanliness & Value). Familiarity breeds comfort: The first step for the brand was to establish itself as a familiar, comfortable place. Taking a cue from the Indian family values, the year 2000 saw the first ever McDonalds ad aired in the country. A child, who is unable to recite a poem and suffers stage fright, but when he enters McDonalds, he easily recites it when in the comfortable familiar environment of McDonalds. Working on the insight similarly when his family moves into a new place, the child misses all that has always been so familiar and dear. He then has the comfort of something that is dear and familiar to bring a smile to his face. McDonalds was successful in creating an image of a warm and comfortable ambience through its ads. McDonalds mein hai kuch baat: Making McDonalds the consumers favorite place and way to eat.

While kids and families were key, it was also important to talk to the generation that had not grown up on McDonalds burgers and fries. An adult who works with logic and reasoning would need a reason tempting enough. And what better way to talk to them than talk about McDonalds core competence food! Even in Dreams: McDonalds realized that the way to draw more consumers would be to increase the visibility of the brand and its products. The more a person saw food, the greater his urge would be to try it out. The company came up with its next round of campaign to address and reflect this. The campaign showed different people dreaming about McDonalds. It depicted how the consumers were totally involved with McDonalds and the food. New product stories delivered in a memorable and engaging approach. It was imperative for the success of the brand to be Indianized to continuously speak to consumers in their language without taking away from its core American parentage. From tears to smiles - campaigns were produced to introduce new, scrumptious products. Let go the child within you: The general brand perception of McDonalds in India was that of a place for kids. While the campaigns had worked in the past, targeting kids, McDonalds recognized the fact that it could not always depend on the kids niche. When kids move up the consumption chain, there is a possibility of losing out on consumers. Moreover, the family outings with children only happen over the weekends and holidays. It was imperative to rope in adults who would patronize the brand over the weekends. Consequently, the next series of campaigns were targeted to drive in adult traffic to break away from the perception. The ad depicted a father being invited to a birthday party at McDonalds. He is not at ease with the idea of visiting McDonalds since he perceives it as a kids place. His child reminds him of the McCurry Pan, Filet-oFish that he would be able to relish at the birthday party. The food boosts the father to go to the party, where to his astonishment is his boss party. The ad asserted that people celebrate birthdays and occasions at places they are comfortable in! Branded Affordability: Having established the image of comfort and familiarity, it now was time to add new people to the fold. The Indian consumers continued to perceive McDonalds as an expensive eating out option. The challenge was to overcome this perception and be accepted as an affordable brand. While the patented products like McVeggie and McChicken continued to cater to the patrons, the company needed to broaden the audience base to further

entrench into the market. McDonalds found success in its strategy of Branded Affordability and introduced the Happy Price Menu of Rs. 20/-. Engaging and Memorable campaigns were created to establish the Branded Affordability communication The Bahanas, the yesteryears prices, or bees mein full dhamal! Tween - Teen Adult: Over the years, the campaigns have successfully helped in creating an affinity with an audience other than just families and have brought in a large number of young adults as well. Today, though McDonalds, is a family restaurant, it is no longer perceived as a place of which you have only fond childhood memories. Moving forward: Three years ago, McDonalds changed the way it talks to customers and employees around the world by uniting behind one voice, one campaign, - im lovin it. Successfully established and executed in over 118 countries, this campaign contributed to the brands resurgence and business momentum. The secret behind the worldwide success of McDonalds is its consistency. Consistency, in not just making a good quality burger, but in serving it in a clean environment, at an affordable price and t hat too within a minute! The most amazing fact is that the quality is maintained in each and every outlet anywhere in the world. The worldwide campaign of im lovin aims to build the brand further in the years to come. With the im lovin it campaign, McDonalds has created a common platform where we can speak to a wide variety of audiences through out the world. A simple message and a campaign that is more than a song or an executional hook a campaign of many real, authentic and genuine messages told in the wonderful McDonalds storytelling fashion. Like our Global Chief Marketing Officer, Mary Dillon, would say, Our customers expect nothing less from us and we shouldnt expect any less from ourselves. McDonalds India, today: Today, McDonalds is the world's leading food service retailer with more than 31,000 restaurants in 118 countries serving 50 million customers each day. Celebrating its 11th year in India, McDonalds today has a network of over 113 restaurants across the country and is moving from strength to strength. Its unique cold chain has brought about a veritable revolution in food handling, immensely benefiting the farmers at one end and enabling customers to get the highest quality food products, absolutely fresh and at a great value. McDonalds India caters to approximately 2.75 lakh customers, every single day, across the country. And to serve the 2.75 lakh consumers, McDonalds uses 82 million Buns, 66 million Patties, 2.1 million litres of Dairy Products, 0.5 million kgs of Lettuce, 0.12 million kgs of Curries, and 22 million litres of Sauces. With a brand philosophy of Forever Young, McDonalds India has always modified its strategy to cater to the contemporary market requirements and continued to sustain its leadership position in the Fast Food industry.