Battle of the burgers: McDonald's Japan
The golden arches of McDonald’s are one of the most recognizable icons in the world and nowhere more so than in Japan where the fast-food giant has 3,156 stores and employs over 160,000 crew.
Long-term residents of Japan will remember the opening of the company’s first store in the Ginza Mitsukoshi department store in July 1971. Since then, McDonald’s Japan has gone from strength to strength in the Japanese market, developing human resources at its famous Hamburger University where 8,000 employees annually receive training in management, team building, communication skills, and QSC&V (quality, service, cleanliness and value).
McDonald’s is also heavily involved in charity and sports sponsorship in Japan. The Ronald (Donald in Japan) McDonald House Charities supports children hospitalized far from home and their families; McDonald’s provides food education and work experience; in local communities, it runs “Clean Patrols” to clean up the areas surrounding stores and gives out crime prevention whistles. In sports, McDonald’s Japan supports children’s baseball and youth soccer. For the current World Cup, McDonald’s sent 11 Japanese children and their guardians to Brazil to accompany the Japanese team onto the pitch.
But, of course, everything hinges on the McDonald’s dining experience and these are challenging times for the fast food industry. In 2013, operating profit for McDonald’s Japan slid 53.5% from the previous year to ¥11.52 billion and net profit plunged 60.1% to ¥5.138 billion. System-wide sales fell 4.8% to ¥504.45 billion.
Overseeing McDonald’s Japan operations is Canadian Sarah L Casanova. After obtaining a Master of Business Administration from McMaster University in Ontario in 1990, Casanova joined McDonald’s in 1991. She has worked in Russia/Ukraine, Malaysia and Singapore, before assuming her current position in Japan last summer.
Japan Today editor Chris Betros visits Casanova at the McDonald’s Japan office in Tokyo’s Shinjuku to hear more.
Where are you focusing your efforts this year?
In 2014, we have been focusing on three key areas – enhancing our exclusivity, introducing new initiatives to meet consumers’ demands and modernizing restaurants. Our customers told us that the menu was becoming a little ho-hum and not very exciting. With our exclusivity, our strengths are “Made for You,” “Kids and Family” and “Drive-Thru.” We have been improving restaurant facilities for kids and families to give them the best restaurant experience possible. We’ve also enhanced our breakfast menu to attract more customers. To further meet customers’ needs, we intend to double the number of McDelivery restaurants (133 as of December 2013) in 2014.
What are some unique characteristics of the Japanese market?
Actually, I’ve found that McDonald’s customers are not that different around the world, though every market has some differences in taste preferences. In Japan, one of our best sellers is the Teriyaki Burger which is a Japanese flavor done in a Japanese way. However, the core menu remains Big Macs, Double Cheeseburgers and Egg McMuffin. Our French fries are as loved here as they are anywhere else.
Japanese consumers love new items, and you see this not just in fast food restaurants. So we introduce a lot more new menu items in Japan than we would in other McDonald’s markets. An example of that is the World Cup menu—every single item is brand new and developed in Japan.
You mentioned modernizing some restaurants.
Since we have been in Japan for 43 years, we need to look at modernizing our restaurant environment from a long-term perspective. We will remodel some restaurants, and there will be some closures. We’re opening more Gold Standard Drive-Thrus.
How do you get feedback from consumers?
We do a number of customer research efforts, online surveys and face-to-face focus groups. We really want to put our customers first and we need to know what they want and where we are not meeting their needs. One of my favorite things to do and I did this when I first got here, was to go across the country talking to crew, managers, franchisees and customers. That’s the best way to get feedback about menus.
How did the sales tax hike impact your business?
The results were within what we predicted. We talked to a lot of customers beforehand and they said they wanted transparency in our pricing. We went to one-yen pricing, exactly 3% on most items, rather than in 5 or 10-yen increments. Customers said they really loved the 100-yen menu, so we decided to keep that. The tax went up but the tax-inclusive price stayed at 100 yen. And we lowered the price of the hamburger—which is iconic to consumers—to 100 yen and we’ve had tremendous response to that.
As you know, the fast-food industry is often criticized for not being “healthy.” What do you think?
There is no such thing as unhealthy food, just unhealthy eating habits. We make nutritional information available on our website and in our restaurants so people can make informed choices. If you take a look at a McDonald’s menu, we have a wide range of choices. The Happy Meal menu has over 100 choices available because moms can choose between hamburgers, cheeseburgers, chicken McNuggets and petit pancakes. They get to choose between French fries or a side of corn. Then they can have milk, vegetable juice, orange juice or soft drinks.
For adults, we have the Made for You system, which is a little different from what it used to be in the past. We don’t make your sandwich until you order it. You can order it without cheese, without sauce, get extra pickles … with some limitations; we make it the way you want it.
An important pillar for McDonald’s is to encourage an active lifestyle. McDonald’s sponsors one of the biggest kids’ baseball tournaments in Japan, as well as children’s soccer. Donald McDonald is out in the field in kindergartens teaching children exercises.
Do you see potential for growth in Japan?
Definitely. Out of the top 10 or 12 countries for McDonald’s, Japan is the most dense per population for IEO (informal eating out). There is huge potential here for us. The IEO value is 16.1 trillion yen. We have 3.1% of that.
How often do you eat McDonald’s food?
I joined McDonald’s because I love the food and I eat something from the menu almost every day, usually for lunch. I love Big Macs. When I’m out doing restaurant visits, meeting the crew and managers, they want me to try the food. I try and get out for an entire day visiting our restaurants at least once a week.
What areas of the business are you hands on?
My main role is to set the vision and work with the team on strategy. My second role is building a team to execute plans to deliver the strategy. So I prefer to be more hands on with setting the vision of where we want to go and what strategies we use to get there and then empower the team to carry that out.
Is McDonald’s a fun place to work?
It is a great place to work. We have 160,000 employees across Japan and we have strategies in place for hiring people and enabling them to become managers and franchisees. I think we are a respected employer because it is not just a job. We give people training that will help them no matter where they move on to, whether it is within McDonald’s or another career. For me personally, the most fun part of my job is going to the restaurants, meeting customers and crew and taking pictures with them.
How do you like to relax?
I try not to work on weekends but in this role, there is no such thing as a 9 to 6 job. Things come up. I love swimming and used to be a competitive swimmer. Tokyo is a great city for walking and my husband and I enjoy that. I like to read, too.