nickshanagher

There are three reasons to read Grinding It Out by Ray Kroc, who developed the world’s best fast food franchise, McDonald’s. The first is to understand how great salesmen work. The second is to understand how to lead and develop a great business. The third, and the one which this review will dwell on, is to understand how a good franchise should work. While there is a difference between a franchise and a symbol group, there are a great many independent retailers in the UK considering some sort of tie up with a wholesaler or buying group to propel their business forward. Kroc’s thoughts provide a useful benchmark to compare what is on offer. “There is a basic conflict in trying to treat a man as a partner on the one hand while selling him something at a profit on the other,” says Kroc. When setting up the McDonald’s franchise system, he decided that it would not supply its operators. This was because he believed that once in the supply business, he would become more conce...

McDonald's is the best fast food operator in the world, details published in the September 5 issue of Fortune show. As part of a feature on chief executive Jim Skinner, the US business magazine lists the annual sales per store achieved by 10 leading fast food companies. The list is: McDonald's       $2.4m Applebee's        $2.3m Wendy's            $1.4m Taco Bell           $1.2m Burger King      $1.2m KFC                 $1.1m Starbucks          $800k Pizza Hut           $700k Dunkin' Donuts  $600k Subway             $400k These figures...

Starbucks provides a cheap place to meet or an expensive place to buy coffee, depending on the shopper's outlook. Aggresively expanding bakers chain Greggs says it plans to increase the number of its outlets selling lattes and cappucinos. While the media says this is a threat to Starbucks, Greggs appears to be operating in the part of the market where McDonald's is operating and that is its natural competition. What is clear about its strategy is that it is tapping into the same "out of home" food and beverage opportunity that is available to local shops. Greggs says it sold 10 million breakfast rolls last year and 300,000 pots of porridge. "Convenience is getting more crowded and everyone is our competitor," chief executive Ken McMeikan told independent retailers at an ACS summit earlier this month. Sandwiches and drinks are now 50 per cent of his sales and coffee is the biggest growth opportunity. His focus is on delivering outstanding service, value...

Fresh Kitchen is a stand-alone sandwich shop under the Sainsbury brand that the FT says is ear-marked for an "agressive roll-out" into the UK if the first site, opened in London's Fleet Street last month, is successful. The paper says that the supermarket chain could open 200 of these outlets, pitching it headlong with Pret-a-Manger and, by extension, with fast food chains like McDonalds. Waitrose, it notes, is already selling sandwiches in some Boots shops and ran its slide rule over the Eat, a coffee and sandwich chain. "Takeaway foods is likely to be the next battleground between the big supermarkets," the paper says. Of course, most local shops with a convenience offer are already aware of the opportunity for food-to-go. This story is further validation of their strategy. While it may be unwelcome to have fresh competition from Sainsbury and others, who are already attacking the c-store market hard, it is still further confirmation that the local gro...

The chief executive of McDonald's, Jim Skinner, clearly knows why his customers love his company's restaurants and last week attacked US regulators keen to ban children's meals as undermining parents. This follows a decision in San Francisco to ban the sale of toys with food that did not meet limits on calories, sugar and fat. He told the FT: "We'll continue to sell Happy Meals. We've seen many years of someone trying to dictate behaviour through legislation. Our Happy Meals have been supported by parents since the 1970s. The nutrition of Happy Meals meets FDA guidelines." For UK local retailers, and their suppliers, this is significant in that most traders fear that the willingness of politicians to legislate to improve the health of the population is out of proportion with the success of many measures. MPs that I have spoken to clearly disagree. They say that the smoking ban is a fantastic success. While they are nervous at the impact on local shops ...

Look at the ceiling and top wall of this McDonalds restaurant. There is a picture of two good looking healthy people having fun and some bright primary colours. Ask yourself what is the purpose of this picture? In the latest issue of Retail Newsagent in a feature on merchandising, Andrew Knight of RI tells its independent readers that they need to think about using sharp pictures of non-packaged products linked to people consuming goods. Perhaps this has been taken to the next level by the fast food chain - that is selling the feeling of being happy and healthy rather than the products. A second, related tip from the same feature is made by most contributors - it is vital to keep windows clean and clear of clutter. "I believe that less is more," says Roli Ranger, a retailer from Ascot, Berkshire. He has posters for promotions in between the windows that are regularly updated and discreet signs in the windows. Third, a highly visible well-stocked promotion at the entranc...

Six out of 10 McDonald's outlets in the UK are run by franchise owners, each of whom contributes 4.5% of sales to the group's marketing budget. This may be a useful benchmark for your business when you think about how much you spend on promoting your business. While McDonald's frachisees expect to see great TV advertising for their money, local retailers might like to think about the strategies behind the advertisements. In 2005 McDonald's had a terrible year in the UK, losing sales and generating bad PR. In the past year, sales have grown by £460 million, chief marketing officer Jill McDonald tells Campaign magazine, driven by £90 million of marketing spend. The turnaround has been achieved by refreshing the outlets, investing in better kitchen equipment so it could deliver hot food faster, and by promoting the quality of its food. If you look behind most successful local shops in the UK you will see a similar pattern: investment in making the store attractive, gettin...

Having bought a caffe latte from McDonald's for £1.35 and finding its packaging was really neat and it tasted good, I have suggested that this sets a new benchmark for UK local retailers in terms of price and quality. This morning, fresh 'n' fine, a local shop that I pass by had a sign out front saying coffee and a croissant for £1.45. That's a good deal, I said, trying to work out how much the McDonalds' latte was if I bought six and got the seventh free (if they allow me a latte?) (it's £1.16). The croissant was excellent. The coffee unremarkable, perhaps even a little watery. The important thing is what sort of profit you can deliver at £1.45, and how much footfall you win. On balance, almost good enough!

The coffee! Food-to-go is seen as one of the drivers of local store success for the next five years but McDonald's is now delivering a great product at a low price. While the City may be assessing the challenge that McCafés will deliver to Starbucks, for the local retailer the competition for footfall will be a challenge too! Footfall is the oxygen of retail and if your shoppers are chasing someone else's coffee, then you need to rethink your business plan.