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Fast Food Native

Sunday, March 1, 2009 - 09:41

Catriona Noble, the new head of McDonald's in Australia, reveals the burger empire's growth and marketing strategies. By Georgina Jerums

In 1984, Catriona Noble, a 14-year-old schoolgirl from Baulkham Hills in Sydney, began an after-school job for money to buy a nice pair of jeans. It was nothing flash. Crumbing chicken at McDonald's to be precise.

How things have changed since those crew shifts. Today, at 39, Noble has swapped the kitchen for the top seat: Managing Director at McDonald's Australia, the market leader in the nation's $9.4 billion fast-food industry, and the first female MD in McDonald's 10 largest subsidiaries worldwide.

And, despite economic pressures, times are pretty good for the company. Serving 1.45 million Aussies each day, annual global revenue rose 6 per cent from last year to $6.27 billion as at October 2008.

Working from the Thornleigh headquarters in Sydney's north-west, Noble oversees 75,000 staff and 761 restaurants. Her core role is to help coax 295 franchisees and 4200 suppliers to improve their return-on-investment, particularly when they are, as they say in the trade, 'unaligned'.

Noble has been in the thick of alignment issues since October 2008 when she began the new gig. Although it was in the pipeline, it was in effect a two decade-long job interview, learning the McDonald's business inside out by being taken under the wing of former CEO Guy Russo. "I have ketchup in my veins," Noble jokes. Like Russo before he left to head up Kmart, Noble is a McDonald's 'lifer' and has never worked for any other organisation; she often refers to the 'McDonald's family'.

An appreciation of that culture and the inkling she could do big things took shape when Noble was 19. She was working as a part-time manager at McDonald's while studying law/economics at Macquarie University. But her passion was at the restaurant, not in the lecture theatre.

"I could see how I could run the company one day," recalls Noble softly. "That was the reason I left university."

Trained in all areas of the business, including an assistant manager training stint at Hamburger University – yes, it exists – in Oak Brook, Illinois, Noble says she has been stretched.

"You're constantly working through management development programs, or MDPs. There is three to 12 months worth of work in each, and there are formal traineeships accredited with the government, and three- to five-day courses held in regional training centres.

"In our business there are multiple opportunities and you can go off on many different pathways. We used to talk about being an employer of choice, we've now changed that to being an employer of opportunity [internally and externally]."

Mercurial adaptability

In 1940, the first McDonald's store opened in San Bernardino, California. The business changed to a franchise operation in 1955 when Ray Kroc bought equity in the company, and it listed as a public stock in 1965. By 1971, McDonald's first Australian restaurant had swung open its doors at Yagoona, in Sydney's south-west.

So how has it has managed to stay dominant? McDonald's mercurial adaptability – of menu, of restaurant design, supply-chain practices, and of culture – has a lot to do with it.

Examples include customising operations to close five times a day in Muslim outlets, going kosher in Israel, or changing the clown mascot's name, Ronald McDonald, to Donald McDonald in Japan because it's easier for locals to pronounce.

Adaptability also means the company can react quickly to event tie-ins. For the Beijing Olympics, McDonald's developed five 'world burger' promotions that were far from random. "Like a good three-piece suit," explains Noble, "when you watch each of those ad promotions, they should feel like they're cut from the same cloth. And across the whole year, they should feel like they're from the one brand."

McDonald's adaptability even extends to exploiting social trends. Where the goal was once to open more outlets, the business plan is now built around responding to life trends, sourced from online, face-to-face and in-home interviews of more than 15,000 people nationally each year. Among other things, the research has indicated customers want menu options with the Heart Foundation's tick of approval (for which McDonald's pays $330,000 annually for the cost of audits and food testing), more stylish restaurants fit-outs and made-to-order coffee.

Continued growth

That said, the company's core focus on speed, lower prices and volume remain king, particularly in light of bank failures, sharemarket slumps and recession jitters. "Look at takeaways and cafes at the moment," points out Noble. "They've all just had a massively negative quarter and we've had another great quarter."

She's not wrong. October 2008 sales leapt 11.5 per cent in the Asia/Pacific, Middle East and African regions, driven, according to the company "by robust sales growth in Australia and broad-based strength throughout the segment. Locally relevant menu choices, branded affordability, and extended hours fuelled the segment's October sales".

Indeed, Global CEO Jim Skinner goes so far as to call the company 'recession proof' thanks to its large menu, which acts as a buffer when commodity prices soar.

Tough times are presenting another opportunity, in securing desirable store sites. "We need to grow," says Noble, "otherwise you open yourself up to competitors. There are sites, particularly in capital cities, that we have wanted to be in for a long time, on the Pacific Highway in Sydney, for example."

Marketing

In such a competitive marketplace, McDonald's is always on the lookout for opportunity. And you would expect an operation with its resources and wherewithal to innovate; the several million dollars McDonald's Australia invests annually in research has exposed another trend: restaurant visits are not so much by demography or class, but by occasion.

In other words, even wealthier people sometimes choose the cheapest menu items depending on how they're feeling. This research insight is gold for the company because it will form part of the next advertising campaign, called 'Moments', which will push an emotional connect with the brand.

The game plan is not to get everyone eating McDonald's weekly, however.

"There's a small group of people who come here very frequently," says Noble, "but well over half our customers are coming in once or twice a month, at most. So there's an opportunity for us, if we could get that half of our customers just coming once more a month. We're looking at giving people lots of reasons and choices."

Putting out fires

In recent years, McDonald's image has taken a battering. Fast Food Nation by Eric Schlosser, and Morgan Spurlock's documentary Super Size Me, were harmful to the company's image and bottom line.

While McDonald's usual PR strategy had been to ignore negative press, the company realised that many people interpreted its silence as equalling guilt. Claims that pig fat was used in thickshakes, that hamburgers didn't contain 100 per cent Australian beef and that the apple pies contained chokos were false and McDonald's responded by rolling out a myth-busting campaign, explaining the nutritional content of its menu.

Nonetheless, Noble concedes some changes were needed. "Our customers had been telling us things that worried them for a long time, [things] that actually were true and we didn't think were a big deal; like, 'you've got a lot of sugar in your buns'. We did. We don't any more [there is 50 per cent less sugar in buns these days]."

In 2004, McDonald's then-boss Guy Russo opened National Diabetes Week. Like inviting Dracula to the opening of a blood bank, sniped Australian Medical Association President, Bill Glasson, to the media.

"We copped a lot of criticism," says Noble, "but our message always was, 'we are going to be part of the solution and so you're going to need to find a way to work with us'."

While efforts to push a healthier lifestyle has led to McDonald's attending obesity summits, recruiting dieticians to consult on menus, nutrition labelling its packaging and switching from beef fat for frying chips to a no-cholesterol alternative, Noble acknowledges some people just eat Macca's because it's convenient, and do so reluctantly.

"Not everyone loves us," she says, point-blank.