From Săo Paulo to Shanghai, McDonald's is boosting growth with speedy delivery
by Michael Arndt
Mickey D delivers? You bet. While Americans suffering from a Big Mac attack typically pull up to the drive-through window, in the developing world the fast-food chain increasingly does the driving. In traffic-choked cities from Manila to Montevideo, McDonald's deploys fleets of motor scooters to get hot food to customers fast. "I'm too lazy to go out and stand in line," confesses Nada Abou el Soud, a Cairo high school student. She says she calls in an order for a Mc- Chicken combo meal at least once a week, dropping about $4.25 each time, including a 70 cents delivery fee.
All told, McDonald's delivers in some 25 cities, with a half-dozen more on deck. The company just launched deliveries in Taipei, with 1,000 drivers, is expanding Shanghai to citywide service this summer, and is testing the concept in Beirut and Riyadh. In Egypt, where the setup was pioneered in 1995, deliveries now account for 27% of all McDonald's revenue and up to 80% at some restaurants. Globally, delivery sales are expected to total more than $110 million in 2007, up from $90 million last year, the company says. While that's spare change for the $21.6 billion giant, the business is growing by 20% to 30% annually, more than triple the chain's overall rate.
NO CLEANUP It's profitable, too. Delivery margins usually top the 13% to 14% that McDonald's outlets generally yield. That's because the courier fee, which runs from 50 cents to $1, covers the cost of handling phoned-in orders and the fleets of drivers and motorbikes. "And we don't even have to clean up a table," notes Timothy J. Fenton, president of McDonald's Corp. (MCD) operations outside the Americas and Europe. "It's incremental profit for us."
The business is emblematic of the change in thinking at the Oak Brook (Ill.) company. From McDonald's start in 1955, headquarters dictated pretty much every detail of running a franchise. But as revenue growth stalled several years ago, management began encouraging experimentation. So while the basic menu and layout of a McDonald's is still pretty much the same everywhere, restaurants in China now have latitude to substitute corn for fries in Happy Meals, some in the U.S. blend fruit smoothies, and those in Australia and France have coffee lounges that feel like a Starbucks (SBUX). "Management is looking beyond Oak Brook for inspiration," says UBS Securities (UBS) analyst David S. Palmer. "They're becoming better at sharing the best ideas around the globe."
McDonald's opened its first location in Egypt in 1994. Its local licensee quickly suggested adding delivery after noticing that other fast-food chains, and even five-star hotels, offered the service. The first trial took place six months later at two outlets. One key was setting up a call center with a single toll-free phone number for metropolitan Cairo. The other was hiring hundreds of scooter drivers to snake their way through the city's thick traffic to make their drop-offs before the McNuggets get cold. Today, almost all of McDonald's 35 restaurants in and around Cairo deliver, while only a couple have drive-through windows. McDonald's has mimicked this setup as it has expanded the service to other countries.
One place, though, that the Golden Arches won't come knocking is the U.S. The delivery model works well in congested cities where there's no affordable space for drive-through windows, but plenty of cheap labor to ferry the food to customers. Except in Manhattan, where a handful of McDonald's deliver phoned-in orders to nearby high-rises, land isn't an issue in U.S. cities and people find it easier to pick up meals themselves. But with ever more sales coming from abroad, Ronald McDonald will be plenty busy making the rounds for some time.
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McDonald's in New York delivers, which is odd because there is one on every other block, and everyone walks.
Posts: 345 | Registered: Aug 2006
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The bread is different. They try to keep it the same, but because they are working with different bakery`s there are variations...
-------------------- “Out beyond ideas of wrongdoing and rightdoing, there is a field. I will meet you there.” Posts: 7202 | From: EU | Registered: Nov 2006
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The meat and pickles are different, too. Much less oily than in the US. Everyone who has lived in both the US and Egypt knows that the meat tastes better in Egypt because they don't grow their livestock and vegetables over night I have one Egyptian American friend who refuses to eat Mediterranean food in the States because frankly what passes for "good" Mediterranean food in the States would get thrown in the garbage in Egypt and the rest of the region.
Posts: 345 | Registered: Aug 2006
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Since we are discussing McDonalds I would like to bring up the Big Mac Index. The disparity in prices from country to country is huge.
Big Mac in Egypt costs: $1.60
The most expensive Big Mac is in: Iceland and costs a staggering $7.44
The least expensive Big Mac is in: China and costs $ 1.41
What’s interesting is China’s Big Mac is cheaper than Egypt yet McDonald’s employees in China are paid more than Egyptians. The obvious reason is a labor law that stipulates Chinese working for foreign companies (e.g. McDonalds) can not be paid less than $1 per hour (Minimum Wage).
So.... lousy pay translates to lousy Big Mac
Posts: 2079 | From: 'by any means necessary' - Malcom X | Registered: Mar 2007
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I never eat Big Mac ... so I don't know the prices.
I loveeeeeee the Cheeseburger and it costs 1 Euro (so about 7 egy pounds) ; (Euro-deals)
My egyptian friends say I should try "Mac Arabi Kofta" when I am back there, but I have no idea what it is ... Posts: 2932 | From: Just now and then | Registered: Nov 2006
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McDonalds in Sharm seems far more developed than our one here in the uk. Kids meals you could have 4 / 6 nuggets - better for hungrier kids. Adults nugget meal also seems to come with 9 nuggets as standard, everything seemed bigger, my husbands burger (no idea what it was) had 4 burgers inside it! The food tasted great, was hot, delivered too the table and no sooner had we finished the debris was cleared away (before we had a chance to do it ourselves) and the table was all wiped down. The toys that accompany the kids meals are better too. It's also service with a smile.
Posts: 6 | From: Llanelli | Registered: Aug 2007
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Have any of you seen "super size me"....Documentary this turned me off to McD's for life.....I don't know about Egypt, but whenever I've eaten their food.....I'm sick within 20 mins......blah! Here is the link to the movie....if your bored http://www.tv-links.co.uk/listings/9/4670Posts: 29 | From: San DIego, Ca USA | Registered: Aug 2007
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quote:Originally posted by ReenaModa831: Have any of you seen "super size me"....Documentary this turned me off to McD's for life.....I don't know about Egypt, but whenever I've eaten their food.....I'm sick within 20 mins......blah! Here is the link to the movie....if your bored http://www.tv-links.co.uk/listings/9/4670
'Fast Food Nation' made me swear off Mickey D's and all other junk food chains.
Posts: 2404 | Registered: May 2006
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McDonald’s Egypt has an issue with bread freshness. They are somehow reluctant to throw away leftover buns for the day, frugality is sometimes counterproductive and besides they could offer such bread to the poor.
Posts: 2079 | From: 'by any means necessary' - Malcom X | Registered: Mar 2007
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