A year into his role at McDonald’s UK, Paul Pomroy is determined to continue to listen to customers and build on current momentum. He sets out the challenges the brand faces and the changes he is overseeing
About 90% of the population visits a McDonald’s in the course of a year so you will be aware of who we are, but how well do you actually know us? Let me start by sharing a few facts that might surprise you.We serve more than 3.5 million customers a day and have more than 100,000 employees in the UK. Some 70% of branches are franchised with the aim of reaching 85% during the next three years.
If we were listed, we would be in the top 20 retailers in the UK. Our turnover in this January alone was the same as it was in December 2013. We have been on an incredible journey of 39 consecutive quarters of sales growth. Because of those figures I get asked a lot by people “how do we keep that level of commitment going?” and “what is the secret to this success?”. Many people are looking for a silver bullet or easy answer. Our results are achieved through hard work and you can never forget that.
When promoted to chief executive of the company in February 2015, I had three main aims for the business. The first was to keep investing in what truly matters to our customers, I really want them to love coming to McDonald’s again and admit to doing so. The second is to invest in the life blood of our business, which is our people. The third is investing in lasting and fruitful relationships.
Unfortunately it has not always been like that. I have been with the company for almost 20 years, 10 years ago we spent a huge amount of energy proving to the media, our customers, stakeholders – everyone outside our head office – that they were wrong about us. Our old vision meant we were trying to do too much too often.
We weren’t doing very well and about 10 years ago, we went though our worst performance in the UK. Things needed to change. The most important change was that we again started to listen to our customers to find out what they wanted and those consecutive quarters of growth began from that.
Keeping relevant to customers
When I was promoted last year, I got many internal and external emails congratulating me but also saying “don’t muck it up”. It was clear to me that we needed to keep listening, to listen to understand, and that the understanding bit was crucial. We need to respond to our people, franchisees, suppliers and, most importantly, customers.
Listening and researching is embedded into the business. At the start of every year, myself and my executive team carry out a three-day safari across the group’s estate, listening to customers, focus groups, checking out our rivals and, most importantly, listening to our partners.
The journey at McDonald’s, in changing for the better, can never stop. It is critical to keep improving, which brings me back to the first one of my aims – we must continue to invest in what is key to our customers. I am a realist; customers don’t always love a visit to McDonald’s, they see it as a functional visit, we are a functional brand, but we need to change that.
Our brand scores can lag behind our strong business results. There are perceptions about McDonald’s that really get under my skin. We have been doing some marketing during the past year to try to put some of those wrongs right.
As part of last year’s detailed segmentation piece of work, I wanted to get closer to our customers. We interviewed more than 5,000 customers, not just in generic groups as we have done before, but also individual visits to find out what they liked about McDonald’s, what they disliked and, most importantly, what they wanted us to change.
It really challenged our thinking and identified opportunities for us and areas to focus on. We had to listen again and respond. For example, we weren’t as contemporary to 17 to 24-year-olds as we thought we were and they wanted us to change. They told us there wasn’t enough spice on the food, so we started to add that to the menu with new ranges – for example, the peri peri wrap. We have also introduced customisation, so you can now customise your burgers and your wraps.
We heard from mums and one change was they wanted smaller water bottles for their children to handle – small changes that make a big difference to our customers.
They wanted to hear more from us about the quality and freshness of our food. We use 17,500 British and Irish farmers, we only serve 100% British and Irish beef, our eggs are free range, our milk organic, these facts don’t always get to the customer. From farm to front counter, we need to keep improving the communication across the business, so customers understand the journey we are on.
Our people matter
We were really pleased with the success of our recently launched Signature range – a range of gourmet burgers our chefs have developed in-house to tackle the gourmet market. They have been tested in 30 sites and I am pleased with the feedback of our customers, so much so that we have already begun the next stage of the their rollout. Customers not only tell us that they love the product, but that it changing their perception of the brand. It is surprising them and delighting them on their visits.
We also need to stay focused on what customers like about us, which is our speed of service and accuracy. For a business of our size and scale, it is critical that we are able to deliver on the menu we have. Matching the needs of 3.5 million customers a day and having a plethora of new ideas to put on the menu is a real juggling act. Serving this amount of customers a day is a real challenge, not one of them tell us that they want us to make our service slower or more complicated, but they did tell us they wanted more of a choice about how they ordered and where they ordered. Therefore, in some of our new restaurants, we have introduced kiosks, so orders can be placed through an iPad. We then moved on to introduce table service, here families were telling us that they loved to browse the menu as a family unit at their own leisure. Again, we are commencing the rollout of this service to 400 stores by the summer.
Table service, the Signature Collection, indeed all that I have talked about cannot be taken on without our people. We need to make sure we keep investing in our people. Having a talent pipeline is critical to me. Everyone knows their development plans and career path. We listen to them in terms of overall feedback, but also on the day-to-day running of individual sites through online forums.
The perception of working at McDonald’s is not always good. I truly hate the whole McJobs slogan. I am living proof that McDonald’s is a fun and vibrant place to work, where career progression truly is possible. Many franchisees across the country have started as restaurant managers. We have a belief in developing and nurturing talent for the continuing success of the business.
Lastly, the third main focus for me is partnerships. A lot is spoken about how we work with our suppliers and the fact we don’t always use contracts. I believe in long-lasting and fruitful relationships but how do you put that into practice when sometimes there is a conflict? We always offer support, and the support we give to our franchisees is an example of that. We listen and act on their feedback. We support them to allow them to give their customers a great experience. We also treat our suppliers as partners. We pride ourselves on long-term relationships. For example, we have worked with the same packaging supplier from Scotland for more than 40 years and the same beef and potato suppliers for 40 and 35 years respectively. We also get out and see our farmers to understand the stresses and strains that they go through. We attend many agricultural shows and have a great relationship with the National Farmers Union.
However, don’t get me wrong, I am not soft on price. I started life as an accountant and I haven’t forgotten that they want the best price, but we take a long-term approach that builds in margin to the price that our suppliers get to allow them to invest in our business. That investment and margin has given our top 10 suppliers the ability to invest more than £300m in our business alone in the last three years, which give us a massive competitive advantage.
At a crossroads
Whether established or new, we have to work on these relationships and there are, at times, conflicts, there are moments you disagree, but by taking a long-term approach, you come through them together and aspire to the same things.
We are busy working really hard and have 39 consecutive quarters of growth to show for our efforts. Hopefully by the end of this month, we will get to the big 4-0, which will be a real nice journey for the business to have been on. But I believe we are still at a crossroads. We are at a real critical point of our journey and there are many players in the sector who are nibbling away at the market and growing, and we need to make sure we keep pace. When you are doing well, it is harder to change and easier to sit back and accept you are doing well, but for me, we, as a business, have to keep changing to get better. We have massive decisions in the next 12 months to make about the paths that we take. We need to keep investing to improve the business and investing in what matters to the customers. It can be hard for a franchise business to get entrepreneurs to keep on investing year after year and making sure you get returns, but they give us instant feedback and tell us whether an investment is working. Some of those conversations are challenging and there may be parts of the country where they may not see that they have to invest straightaway for the good of the brand.
During the next 12 months, we are going to embark on one of the biggest transformations we have ever seen, which, internally, we have called ‘Experience of the Future’. It is all about focusing on the customer experience and some of the elements I have already referenced. We are going to pilot schemes that challenge the perceptions of McDonald’s to get customers to reappraise us as a brand. We will change the restaurant environment, the look and feel of the sites, and we have already started that journey. Importantly we won’t forget our own people; they will be getting a new uniform after they told us that the current ones are out of date, so we will keep pace with that needed change.
During the past 10 years, our menu has doubled in size and gone from 50 products to more than 100 today. We have extended our opening hours, with more than half of our stores open 24 hours, seven days a week. We have enhanced our breakfast range. We have also added blended ice drinks to our café collection.
No complacency
Ten years of growth creates a huge amount of energy and that energy needs to remain focused on what matters to the customer. We work to a cycle of continued improvement.
We have to stay honest. One of the key things I have learnt during the past year is that you have to keep things simple. In a business of our scale, the opportunities open to us are massive, we have a number of people coming to us with new ideas and looking to sell new products, but we have to balance that and guard against complexity both in our restaurants and our strategic thinking.
A brand can never stand still and we got it wrong in the past telling people why we thought we were right, and not listening. I will never allow us to become complacent again, we need to be more agile, more nimble and quicker to market with new concepts and new ideas. In the past, we would wait until an idea had been fully tested until coming to market whereas, today, we don’t wait and customers accept you trying stuff as long as you get the communication right.
Our business results have been good, but we must continue to improve.
Paul Pomroy is chief executive of McDonald’s UK
