McDonald's trims the fat to keep up with fast-food trends

Fast food is the new smoking. It's been singled out as one of the main culprits in the developed world's latest public health threat, obesity. Barry O'Halloran reports

In a clear parallel with the way the marketing of tobacco has been treated in this country, there are proposals to regulate its advertising, and there was even a suggestion recently in at least one local authority that planning permission for fast-food outlets be withheld or limited.

One fast-food operation in particular has been singled out for most of the bad press, the daddy of them all, McDonald's. In some corners, it's become a symbol for bloated capitalism.

Anti-globalisation protesters regularly target its outlets (irrespective of the fact that most are owned by small businesses that are actually franchisees) while one New Yorker with an obesity problem unsuccessfully sued the company.

Then there was Fast Food Nation, the book published in 2002 by Eric Schlosser, which lifted the bun on the burger industry. This is not a rant against McDonald's, it's a solidly researched tome that throws serious question marks over what the US fast-food and meat-processing industries are serving their customers. But McDonald's looms large, and the front cover of the Penguin version shows a fries' container much like the ones sold in its outlets.

Mr Marcus Hewson, managing director of McDonald's Restaurants of Ireland, a subsidiary of the corporation that operates the master franchise for this country, has not read the book. But he's adamant about what's in the burgers.

"They are 100 per cent prime beef," he says. Beef can mean pretty much any part of the average bovine, but the word "prime" should mean that only the better cuts of meat are used.

He argues that if anyone saw the firm's suppliers, they would be impressed by the standards of production and hygiene. At least some suppliers are in this country, as its policy is to buy as much as possible locally.

He also stresses that, last year, McDonald's in the UK and other European countries bought €74 million of Irish beef.

Fast Food Nation has sold very well here, but this has not prevented Big Mac meals from selling with similar speed. Last year, Mr Hewson says McDonald's Irish sales grew by 5 per cent on a like-for-like basis to €154 million, while it notched up a 7 per cent turnover rise the year before to €147 million. In 2003, it achieved operating profit growth of 15 per cent to about €20 million. He emphasises the "about" as the accounts have not been finally approved at this stage.

In 2002, the firm planned to add three or four Irish outlets every year, but it only managed to get one up and running in 2003, not because local authorities feared for people's waistlines, but because of the general delays in the planning process that virtually everybody encounters. "We were waiting for places like the Dundrum Shopping Centre in Dublin and Mahon in Cork," he says.

Over the next year, it should make, or possibly exceed, its stated target as projects emerge from the planning process. The firm intends to spend €6-€7 million on building new outlets and adding new features like the McCafe to existing ones. None of this could be taken as an indication that Irish people are staying away from McDonald's.

Whatever people think about its menus, McDonald's Irish business is in a healthy state. It has 68 restaurants in the Republic - 48 owned by 30 local franchisees - and it employs 3,500 people.

Nevertheless, here and in its established US and European markets, McDonald's has recognised that attitudes are changing. Around 12 months ago, the pied piper-ish clown, Ronald McDonald, was sidelined in favour of a wholesome and marginally less irritating pop star, Justin Timberlake, whose hit I'm Lovin' It has become the corporation's new signature tune and catchphrase.

Another ad highlights the fact that the restaurants display nutritional information for everything on sale. Mr Hewson says McDonald's has done this in Ireland since 1986. "We want to be part of the solution," he says.

"For instance, we started adding a choice menu last year with flat breads and salads, then we moved into a healthier choice for happy meals [the product aimed at children, who have always been a key focus of McDonald's marketing\] by offering yoghurts and fruit instead of fries," he says.

This week, it introduced a range of salads, made up of eight new menu items. Part of this is a response to the fear that if it does not take some of these steps, somebody else, namely Government agencies, will take them for the firm. And part is an acknowledgement that it has to change its products to stay in business.

In some ways, McDonald's is really fighting a battle against how the company and its products are perceived. The evidence of that can be found within the corporation itself. It owns a share in a largely London-based coffee shop and sandwich chain, Prêt A Manger, not unlike the dozens of similar operations in this country where many former customers now regularly buy lunch. But when you compare the two, something strange happens.

"If you put a Prêt A Manger sandwich up against a Big Mac, you think you've had a really healthy Prêt A Manger sandwich," Mr Hewson says. "In fact when we did all the analysis on both of them, the Prêt A Manger sandwich actually had more calories than the Big Mac."

This is because the dressings and other add-ons that people want in sandwiches rack up the calorie count. You can order just a plain chicken sandwich in Prêt A Manger, but you can also tailor your order in McDonald's. Mr Hewson says in either case, many don't choose the healthiest option.

In an Irish context, some strategies, not just the addition of salads and fruit to the menu, are paying off. Its euro saver menu, introduced two years ago, has brought people back in through its famed red arches. This offers a number of its traditional products, without the benefit of fries and a Coke, at €1 or €2.

"This is our third year of it, and it's been our main driving force," Mr Hewson says. "It's been particularly successful with a lapsed group of teenagers who had been avoiding us, they've got €1-€2 in their pocket, and they see the food is a good price. That's what's bucked the trend in the last few years. We were the first to do it, and a lot of other European countries have copied it with great success."

It also began to develop its McCafes, offering all available variations on coffee along with sandwiches and confectionery. This was also a McDonald's Restaurants Ireland innovation, although it was partly based on an experiment in Australian outlets. It has brought back single women, who are most likely to stay away from McDonald's because they believe it's bad for them.

Ireland may be bucking the European trend, but at global level, McDonald's is also doing well. The healthier menus are bringing US consumers back, according to Mr Hewson, it is growing rapidly in China (who isn't?) and it had sales of $46 billion last year. And the bad news? Well, Ronald McDonald is returning to our TV screens.