Golden times for global food chain

Profits - and perceptions - have changed since the company rebranded itself and began offering healthier alternatives. Photo / Brett Phibbs

McDonald's shows commercialism and caring can co-exist, writes Guy Adams

The great philosopher John Travolta once observed that, in France, a Quarter Pounder with Cheese is known as a "Royale with Cheese", while they call a Big Mac "Le Big Mac" and allow you to wash it down with beer.

That's the "funniest thing" about Europe, he concluded, during the often quoted opening scene of Pulp Fiction: its people have embraced American culture without entirely losing their soul.

"A lot of the same s*** we got here, they got there. But there, they're just a little bit different."

Another thinker, Thomas Friedman, has also used McDonald's to riff about globalisation.

In The Lexus and the Olive Tree, Friedman famously ventured that: "No two countries that both had a McDonald's had fought a war against each other since each got its McDonald's."

Once a nation dines under the golden arches, he argued, it buys into freedom, democracy, and the American way. Children who grow up eating Happy Meals would rather spend their lives scoffing mass-produced burgers than making war.

This weekend , the golden arches that provided Friedman, Travolta and legions of other modern opinion-formers with food for thought will reach an important milestone: their 70th birthday.

On May 15, 1940, two brothers, Richard and Maurice (Dick and Mac) McDonald, opened their first restaurant in San Bernadino - an unlovely city fringed by mountains, an hour's drive east of Los Angeles.

The company that dreamt up "Le Big Mac" has managed, in the span of a single human lifetime, to devour the world.

Somewhere along the way, of course, McDonald's picked up quite an image problem. In fact, the ever expanding burger brand became a byword for Yankee imperialism.

Critics accused the firm of exporting factory farming and obesity to an unwitting world; books such as Eric Schlosser's Fast Food Nation (2001) and films such as Super Size Me (2004) raised public scepticism about where junk food comes from and what it does to you. It became an unfeeling corporate villain, giving us McLibel, along with one of society's creepiest clowns.

Yet despite the PR difficulties, McDonald's kept on expanding (much like the world's waistbands) and in the past couple of years it has entered a sort of golden era. The other day, its shares touched an all-time high of US$74 ($103), up from US$12 in 2003.

Across the world, its sales are sky-rocketing. The UK, where its brand was widely considered dead and buried in 2005 - with sales that had been flat for five years, and profits that had just collapsed by two-thirds - is now the most successful foreign market in the US firm's history, with sales up £450 million ($931 million) in 2009.

This trend lays bare a long-standing fact: it's easy to idly knock McDonald's and everything it stands for, but when you hold your nose and peel back the greaseproof paper a surprisingly progressive institution sometimes emerges.

In Britain for example, the firm puts its recent financial success down to a £95 million "re-branding" exercise to reinvent itself as a touchy-feely retailer, where customers can now use free wi-fi , drink rainforest-friendly coffee with organic milk, and eat free-range eggs. Many of its 1200 British restaurants are now painted green.

In the US, recent years have seen a different kind of McMakeover. Here, your average suburban drive-thru now pays lip service to the very un-American concept of sensible eating, selling a vast range of vegetable wraps, salads, yoghurt, bottled water and fruit along with the usual salty fries and lardy burgers.

In a departure from tradition, some of these supposedly healthy new meals even require customers to be able to handle a plastic knife and fork. Today, its biggest growth area is not beef patties or chicken nuggets, but gourmet coffee.

Again it worked. Sales last year grew, in the US, by just under 5 per cent. In a recession where eating out has declined, McDonald's has both stolen market share and safeguarded its image for years to come.

In public, the firm trumpets its interest in issues like animal rights, and recycling, and obesity. It banned GM spuds, and after the campaigning group PETA started moaning about its suppliers' slaughterhouses it brought in animal rights advocate Temple Grandin to make them more humane. Some of their noisiest critics will admit to being grudgingly impressed.

"They've become extremely good at reading where the public is on issues," says Michael Pollan, the green activist behind the film Food, Inc, and author of The Omnivore's Dilemma.

"They'll move just enough to appear progressive, but not so much that it actually costs them too much money. A couple of years ago, for example, they stopped using battery chickens, and crates for pork. They also got rid of Styrofoam cups. Once they change, they're so big that it alters the landscape of the entire supply chain.

"That's the plus side, I suppose, of having an over-concentrated, monopolistic food industry."

Pollan, who has stood in the toxic fields where the potatoes for McDonald's French fries are sprayed with pesticides, and watched their cows being marched to the abattoir, isn't going to be scoffing up McNuggets any time soon. But progress is progress.

Jamie Oliver, the high priest of healthy-eating campaigners, announced last month that the firm had (in the UK at least) improved its "ethics and recycling" to a degree that "puts quite a lot of gastro-pubs to shame".

Its recent financial success, he said, in a newspaper interview, is "proving that being commercial and caring can work. Actually, it's the future."

Should this sudden modishness be a surprise? Actually, no: explore the 70-year trajectory of McDonald's, and you'll realise that it has always had an uncanny knack of staying ahead of the game.

From its very earliest days, the firm's achievements have been built on the most basic principle of successful capitalism: that you must shift, like the wind, when the market tells you to (even if that means taking a short-term financial hit).

The McDonald brothers did not invent the idea of the restaurant chain. Neither, contrary to popular belief, did they come up with "fast food" - the concept by which meals are assembled using relatively unskilled and interchangeable staff on a Henry-Ford-style production line. Dick and Mac simply copied rival operator White Castle's big idea, improving on it where they saw fit. The kitchen was remodelled along White Castle lines, with innovations like specially designed burger flippers, capable of turning four patties at once, and ketchup squeezers that applied completely uniform dollops of sauce to dozens of buns at a time. They decided to sell only burgers, quickly and very cheaply.

They succeeded in turning the kitchen into a perfectly oiled machine, where meals could be assembled at a pace by a handful of untrained cooks. Overheads were minimal. Its selling point was ruthless, factory-like efficiency: each customer ordered at a counter (rather than via waiters), and would be served within 50 seconds. Within years, they were wealthy men.

"It's a misconception that the McDonald brothers invented the idea of applying Henry Ford's principles to food," says Andrew F. Smith, author of Hamburger: A Global History.

"But they did perfect it. They mapped out the kitchen so that they knew, for example, exactly how many steps it took to get from the stove to the counter and back. They refined everything, and mechanised anything that would make the system work faster."

If you study McDonald's, as food historians often do, this story is part of a very similar pattern which emerges throughout its history. The firm has never been run by inspired inventors. Instead, it devotes itself to being a sort of commercial magpie: pinching other people's brilliant innovations, improving them, and cashing in. Even the company's name is a mildly misleading: for much of its extraordinary rise, the firm does not have Dick and Mac to thank. The man behind the legend was instead a canny Chicago businessman called Ray Kroc.

Kroc first came across McDonald's during a trip to California selling milk shake mixing machines in 1954. Intrigued by their steadily growing business, he convinced them to go into partnership with him and swiftly opened up an outlet in Des Plaines, Illinois, where he was a franchisee. By 1959, he'd helped the company expand to 100 locations. Two years later, he bought the entire firm, for US$2.7 million. By the time Kroc died, in 1984, it was the biggest restaurant company in the world.

Kroc also had a keen sense of his own limitations. So he constantly pinched good ideas from rivals. When Burger King began offering indoor dining, Kroc followed suit. When In and Out began making a success of microphone-operated drive-thru, he decided to follow (today, drive-thru accounts for half of all the firm's sales). The Big Mac was a "borrowed" idea: it had been inspired by a rival sandwich, the Whopper.

Kroc's initial mantra, when building the firm, was uniformity: he wanted every dining experience, in every US branch, to be more or less the same. Kroc's burgers became a perfect symbol of postwar orderliness: so neat, so self-contained in their little individual boxes; so reliable.

He also had a commendably intolerant attitude towards corporate baloney, which persists to this day. Where other companies pack their boardrooms with high falutin' Harvard MBAs (the kind who've virtually bankrupted the world's economy), McDonald's is still largely run by men who worked their way up from the shopfloor. Today, 20 of its 50 top managers, including current CEO Jim Skinner, have flipped burgers. One in eight Americans have at some stage in their life worked for the firm, so it has a vast talent pool to draw from.

While McDonald's is often accused of exporting plastic US mundanity, the firm actually realised, when it came to venturing overseas, that imposing a completely star-spangled business model on Johnny Foreigner wouldn't work. When it went international (by way of Canada in 1967, and the UK in 1974) it made a counterintuitive decision: in each new market, it let the locals adapt its concept, tweaking it and adding new menu items to suit its particular clients.

Each of the 124 countries with a McDonald's is allowed to take the concept where it sees fit. In the Middle East, they sell kebabs alongside Big Macs and ban pork. In India, beef is verboten. Milk shakes aren't on the menu in Israel, since kosher law prevents dairy being prepared in the same kitchen as meat. And France, with its patriotic fervour, metric weight system, and instinctive mistrust of Americanism, makes sure its quarter-pounder Royale with Cheese is made from French beef.

While Friedman's anti-war thesis no longer quite works (Russia saw to that by invading Georgia's South Ossetia region in 2008), this adaptability demonstrates how McDonald's represents some of the best of global capitalism, as well as the worst.

True, they may never find a way to stop customers getting fat. Neither, in all likelihood, will the firm find a way to sell 60 million burgers a day without killing lots of mass-produced animals. But if their last 70 years have taught us anything, it's that if there does happen to be a solution to the fast-food industry's problems out there, McDonald's will probably be the ones to take credit for finding it.

NUMBERS
32,000: The number of outlets in 117 countries.

3: The number of new stores that open each day

1000: The number of outlets in China

- Independent