News
McDonald's Stays Winning
By: cnn.comPosted On: 07/12/2009 3:48 P
NEW YORK (Fortune) -- While the latest headlines from McDonald's may be distinctly American -- its $4 Angus Burger recently debuted with much fanfare -- it's abroad and not at home that McDonald's has been doing its best business during this recession.
Despite hard times and widespread sales slumps across nearly every type of industry, sales at McDonald's (MCD,Fortune 500) continue to climb, and that's largely a result of the company's efforts to broaden its global appeal. Since the late '90s, more than half of the company's total sales have come from abroad. And last year, international sales accounted for more than 60% of its $23.5 billion in total revenues.
That's good news for a company that, while still robust in the United States, has seen sales growth begin to slide. U.S. comparable sales grew 6.1% in April, but slowed dramatically in May, with sales up just 2.8%. By contrast, comparable sales abroad remained steady at above 6% this year: In May, sales rose 7.6% in Europe and 6.4% in the company's Asia/Pacific, Middle East and Africa segment.
"There was definitely some disappointment with the results," says UBS analyst David Palmer. "But McDonald's also saw out-performances in places like Europe where I definitely wasn't expecting growth to that degree."
That's no accident. While McDonald's has benefited from its global presence during the current recession, its worldwide advance began decades ago. And it's had some successful -- if amusing -- results: In Mexico, there are McMollettes, or English muffins topped with bean, cheese, and salsa. The McArabia features a chicken patty with garlic mayonnaise, vegetables, and Arabic bread. There's Vegemite on toast in Australia and Chicken SingaPorridge in Singapore. And don't forget the McAloo Tikki -- made with potato and vegetables -- and the lamb or chicken Maharaja Mac in India.
But just because there's a "Mc" in front of these items doesn't mean they're all alike. McDonald's has courted international consumers with customized approaches, from supporting local farmers and suppliers to creating elaborate guerilla marketing campaigns.
In Italy, it was a question of targeting native palates directly with the Parmigiano Reggiano. Launched in September 2008 and now called the "Parma Reg" by regulars, the beef burger features Italy's popular Parmigiano Reggiano cheese, as well as other key regional ingredients. That, along with attempts to enlist the backing of Italian farmers, has made McDonald's -- in Italy, at least -- feel like a homegrown brand.
"This launch has proven to be much more successful than we expected," says McDonald's spokesperson Louise Marcotte-Jervoe, who points out that, despite the fact that the Parma Reg has exceeded expectations, McDonald's isn't likely to offer it outside of Italy because it is so specialized to Italian culture.
But in some places, it's not just a new product -- but a new image -- that's necessary. In France, McDonald's has traditionally been met with disdain, leading to a farmers' union protest in 1999 led by Jos
Latest VLogs
iLoveMakonnen "Loudest of the Loud Tour - On the Road Pt. 2"
Life With Ty Dolla $ign (Ep. 7)
