After a big slump a decade ago, McDonald's has seen a huge recovery, with the parent company's stock now trading near record highs. John Betts, who runs the Canadian arm of the global fast food chain, is trying to get the message out that the McDonald's of today is very different from ten years ago, thanks to its healthy menu additions, revamped outlets and a focus on coffee.
How did McDonald's get into such a rough patch about ten years ago?
We weren't focused on the customer as much as we had been during the first 35 or 40 years of our existence. We were building restaurants, we were trying to do things as cheaply as possible to get the best returns. We invested in a portfolio of partner brands, [and]we started spending more time and attention on those than our core business. [That]is not a formula for success.
In 2003, a [new]strategic business plan began to take hold, initially in the United States and then throughout the rest of the McDonald's system. We ended up selling off all the partner brands, and went back to just focusing on McDonald's. We slowed down the expansion at the same time. In Canada, our adoption of that plan was not quite as strong as other countries around the world. When I arrived here in 2008, I made sure that everything we were doing was focused on the customers.
How have changing tastes forced you to update your menu?
Way back in the beginning we were a burger, fry, and milkshake place. That's what's people were eating back in the 50s and 60s. It was a very popular, very simplified menu, and customers loved it.
But our eating habits changed. In the 1990s, we tinkered with our menu a little bit by taking some of the fat and some of the taste out of the product, rather than developing new menu items to get more balance. Today we have our original products – fries, Big Macs, hamburgers, cheeseburgers, Egg McMuffins. And we balance it off with grilled chicken, premium salads, oatmeal, and the smoothie offering we've got coming out right now. The food is a lot more relevant today, in terms of tasting good, and providing enough nutritious, wholesome options that some people look for.
H ow did coffee help get people back inside the doors?
Coffee was really the turnaround of our business in Canada. When I came here in 2008 I knew that we had to do something to reconnect with the customers, and the number one product that consumers buy outside of the home is coffee. We got consistent equipment across the country, and we got 100 per cent Arabica beans. We gave away coffee for free. That changed the dynamics of our business. It brought people in by the millions.
[Owner-operators]were making more money at this point, so we could invest back into the restaurants. Just like our menu had evolved over the years, our restaurants had to evolve too. We left the plastic and gaudy colours behind, and are providing a much more inviting, warm and comfortable experience. We've got nice music, fireplaces and flat-screen TVs.
Are kids less important to McDonald's now?
Absolutely not. They are as important as ever. But it is about making sure that the experience meets everybody's needs. The restaurants are a little more quiet, yet we still have areas for kids.
Are you trying to change the way people perceive McDonald's?
[That's]the number one thing I want to change. I want to make people feel it is good going to McDonald's. We've got free Wi-Fi in the restaurants. You see people with laptops in McDonald's. You didn't see that five years ago. That is a new kind of customer.
Are you getting gen Xers who grew up on McDonald's back into the restaurants?
Absolutely. We've got people coming back who haven't been with us for a while. We can use the word "cool" with McDonald's again. You can use the word "ambience." We are reconnecting. It is a completely different brand.
Do Canadians have different preferences compared to the U.S. or other parts of the world?
Every market is unique. We look to Europe a lot because the palate is a bit more similar [to Canada's]than it might be south of the border. Portions tend to be a little bit smaller in Canada, as [they are]in Europe. We sell a lot more muffins here than they do in the United States. We don't sell as many wraps as they do in Europe, but a little bit more than they do in the United States. One area where it is a lot different is in coffee. We were selling about the same amount of coffee as the U.S. on a weekly basis five years ago. Today we are selling about three times as much.
Is providing more healthy alternatives McDonald's way of dealing with obesity issues?
I think that tagging us with "It is bad for you" is not representative of what the brand stands for today. I honestly don't think that is a fair label. Certainly not today, with all the changes that have occurred. Ten or 15 years ago, it was a different story, [but]we listened to people, we've made adjustments and we are still doing more. It starts with having a menu that provides many different options.
We can also do a really good job at education. We have nutritional posters, we have [nutritional information]on the back of menus, and you can get it on an iPhone app today. [We also]talk about leading healthy active lifestyles.
Will you start building new outlets again?
For sure. We don't know when, but at some point in the near future. There are many, many places that we can build. You can drive down major roads and go for 15 or 20 minutes and not see a McDonald's. We are going to go for the places that will give us the greatest consumer connection. But I have been around a long time [and]at least three times in my career I've seen us overbuild and build too quickly. I have learned to be careful.
How did you get started in this business?
I was going to university in Southampton, New York, in 1970, and McDonald's was coming to town. I applied for a job, and I didn't get it. [But]some people left, and I got a call a couple of months later. I started as a crew person, working in the kitchen. About six months later I was the night shift manager. I worked 4 p.m. to close, six nights a week, going to college full time and making $85 a week. I [then]joined the company [as a staff employee]in 1976 in Boston, and have enjoyed a career that has been one of the most unbelievable experiences.
Are you offended when people talk about low level "McJobs"?
[Negative comments about]the menu, the jobs, and lack of social responsibility are all unfair. My job here in Canada is to change the conversation about each of those. McDonald's is a great place to work. Half of the people who own [McDonald's]restaurants started out as crew people. We are one of the best employers in Canada. It is very rare that someone says, 'I worked at McDonald's and I hated it'. Nine times out of 10 they will say, 'I learned things there, it was my first job.' It teaches them basic skills, teamwork and how to work together.
What is your approach to environmental and litter issues?
We are a big consumer of anything that we touch, whether it is eggs, potatoes, or the cardboard that is used to bring products to McDonald's. We have a total life cycle [approach]in terms of how we look at everything we use, from the time it is created. Almost 100 per cent of our corrugated boxes are recycled. The coffee cups are recyclable. We have a long history of doing these kinds of things, because it is good business, and because it is a wise and cost-effective thing to do. [Our suppliers]are as passionate about doing the right things for the environment, because it is good for their business.
Will the company change under the leadership of the new global CEO Don Thompson?
Mr. Thomson has been kind of running things for the last couple of years. I have no doubt that we are going to be as successful under Don as we were under [former CEO]Jim Skinner. It is nice because we have so many areas of the world that contribute. If somebody softens a little bit because they have been on a run for three years, there is somebody else to pick up the slack.