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Last Updated:  Tuesday, 8 April, 2003, 13:39 GMT 14:39 UK
McDonald's tries for healthier image

By Mary Gahan
BBC News Online business reporter

McDonald's burger being eaten
Salads will be sold alongside burgers
If you took the cheap burgers out of McDonald's what would be left?

It is not a joke, but rather the big question that has been troubling the people who run the fast-food giant.

Falling sales and the first loss in the company's history have forced them to think about radical changes.

For the moment, at least, the hamburger will stay on the menu but alongside will be burgers made from more wholesome meat.

Low-fat yoghurts and a choice of salads will be among the new lines on offer.

Customer service will be improved and the firm will stop its rush to open new restaurants and concentrate instead on keeping customers and attracting new ones to existing branches.

Blamed for obesity

Will these changes be enough to restore the fortunes of the largest restaurant chain in the world?

"I think it's possible," says Jeremy Baker, senior lecturer in marketing at London Metropolitan University.

Inside a McDonald's restaurant
McDonald's is a wonderful company, they were perfectly in tune with an era but then the era moved on
Jeremy Baker, Marketing lecturer
"They've got the sites, they've got the skills and there are a lot of people who find it so convenient."

But the fast-food pioneer will have to work hard to restore its image.

It has faced increasing criticism about the type of food it sells and has been taken to court in the United States on the grounds that its diet of chips and burgers caused obesity in children.

Against this background, McDonald's thought it was enough to just keep on expanding around the world - it has marched into 118 countries and, by its own reckoning, serves 46 million customers every day.

The figures are impressive but the burger giant had lost sight of what was happening beyond its golden arches.

Being dumped

"McDonald's is a wonderful company, they were perfectly in tune with an era but then the era moved on," Mr Baker says.

Outside a McDonald's restaurant
The fact that they have woken up to this and publicly announced that they're doing something about it is a good sign
Jeremy Baker, Marketing lecturer
"You could say the consumer was not grateful. We have got used to something and we have just moved on, unfortunately for the company.

"It's like dumping a good old friend because they're hopeless."

McDonald's failed to notice it was being dumped until its share price dived and it made a $344m (222m) loss at the end of last year.

The company made a classic business error, according to Chris Wood, chief executive of branding and innovation specialists Corporate Edge.

"McDonald's built its success on building a highly efficient machine and system and really making that machine work well.

"The big mistake was to get stuck in that and say: 'We have got something and we'll just crank up the handle and produce more of that.'"

It took chairman and chief executive Jim Cantalupo - brought out of retirement to restore the company's fortunes - to recognise the rot.

"The world has changed. Our customers have changed. We have to change, too," he announced.

'Remember your roots'

Mr Baker thinks a parallel can be drawn with the problems that confronted the Marks & Spencer when it suddenly found it was no longer the star of the British High Street.

People still like burgers and want that type of food, just not dripping in fat
Tom Andrews, Marketing consultant
"A loss is a tremendous stimulus," he says.

"The fact that they have woken up to this and publicly announced that they're doing something about it is a good sign."

But the company will have to work hard to recover because the arguments about unhealthy food and obesity will not go away.

Mr Baker believes that in this climate the move to healthier options could work in McDonald's favour by making people feel that they are eating food that is good for them.

Tom Andrews, from the marketing consultancy The Value Engineers, agrees that the change in direction could be a success as long as the company does not take a leap too far.

"It doesn't mean they have to be healthy, but just be able to show they're more modern and relevant.

People still like burgers and want that type of food, just not dripping in fat."

Elizabeth Finn, managing director of Futurebrand in London, says that whatever new options the company tries it should not forget where it came from as a business.

"It's roots are in value meals for families, so don't throw the baby out with bath water," she warns.




SEE ALSO:
McDonald's goes upmarket
08 Apr 03  |  Business
McDonald's plans Indian expansion
07 Apr 03  |  Business
McDonald's posts first-ever loss
23 Jan 03  |  Business


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