RUNNING HEAD: The Big 10: Going Local?
The Big 10: Going Local?
Glocalisation within International American Quick Service Restaurants
Helle Kristine Kragh
Maria Bjerg Jensen
Aalborg University
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The Big 10: Going Local?
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Abstract
This paper will examine if the fast food giant McDonald’s have influenced other
companies in the same industry to change their ways. The first part of the paper will be an
introduction of the problem, Can a trend of change from a more global attitude to more local
adaptations of services and products be observed within major international American fast
food chains or is this only a McDonald’s strategy?, then a brief explanation of the reason
why this question was asked and why the cases chosen to answer the question were chosen.
Then follows a description of how the question will be answered through the 10 chosen cases
and comparative method. Next is a definition of relevant terms and concepts as well as
relevant theory. Next is a review of the background, some recent relevant facts and
organisational structure of the 10 cases. Then a short chapter about McDonald’s and how
they have been keeping other companies at bay and stayed number one in their specific
industry this is followed by an analysis of the 10 cases focused on Advertisement, Branding,
Products and services, franchising and culture. The advertisement part of the analysis will
examine how the 10 companies does local advertisement and see if this have changed. The
branding part will look at how the 10 cases have strong brands and how they might use these.
The products and services part of the analyses will compare menus from different countries
and see how they differ within the company. Lastly the franchising and culture part will look
at how franchising is a good model for international business and why this is. A discussion of
how these compare and why these things were will follow and then what could have been
done differently or otherwise focused at will be discussed. Lastly is the conclusion which
answers the research question by concluding that even though 8 out of 9 companies follows a
similar approach as McDonald’s it cannot be concluded that they are following in the
footsteps of McDonald’s and that even though franchising seems to be a successful way to do
international business Starbucks is an example of how other approaches also work.
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Table of Contents
Introduction ............................................................................................................................................ 5
Methodology........................................................................................................................................... 7
Theoretical and Conceptual Framework................................................................................................. 8
Culture ................................................................................................................................................ 8
Globalisation ....................................................................................................................................... 9
McDonaldisation ............................................................................................................................... 10
Localisation ....................................................................................................................................... 11
Glocalisation...................................................................................................................................... 12
Advertisement .................................................................................................................................. 13
Branding ............................................................................................................................................ 13
Legitimacy ......................................................................................................................................... 14
Cases: Historical and Organisational Backgrounds ............................................................................... 15
McDonald's ....................................................................................................................................... 15
Kentucky Fried Chicken ..................................................................................................................... 17
Subway .............................................................................................................................................. 19
Pizza Hut............................................................................................................................................ 21
Starbucks ........................................................................................................................................... 22
Burger King........................................................................................................................................ 24
Domino's Pizza .................................................................................................................................. 28
Baskin-Robbins .................................................................................................................................. 30
Dunkin' Donuts.................................................................................................................................. 32
Dairy Queen ...................................................................................................................................... 33
McDonald's As a Trendsetter ................................................................................................................ 35
Case Analyses ........................................................................................................................................ 36
Advertisement and Branding ............................................................................................................ 37
McDonald's ................................................................................................................................... 37
Comparison and Contrast ............................................................................................................. 38
Products and Services ....................................................................................................................... 42
McDonald's ................................................................................................................................... 42
Comparison and Contrast ............................................................................................................. 43
Franchising in Relation to Glocalisation ............................................................................................ 45
Discussion.............................................................................................................................................. 47
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Conclusion ............................................................................................................................................. 48
Bibliography .......................................................................................................................................... 50
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Introduction
Many American companies are known all over the world and have a lot of success in other
countries and cultures. One of the industries where the companies have a lot of global success
is food or more specific the fast food industry. In this industry there are many companies, e.g.
McDonald’s and Burger King, which have bases of operations all over the world. Because of
this it might seem like the world is becoming smaller, more homogeneous – effects that have
been articulated variously, e.g. as Americanisation, McDonaldisation or westernisation (e.g.
Hopper, 2007, p. 88). Through personal observations while visiting various restaurants
around the world, we seem to have noticed a change – or intensification – of the way e.g.
McDonald’s and Burger King operate with and for their local markets and customers.
Through travelling, we have noticed how especially McDonald's has adapted to local
countries and cultures, which on the surface appears like a change from a more global focus
to a more local one in approach to both products and promotions.
Our problem formulation is whether or not a trend of localisation can be observed in a
list of major American quick service restaurant chains, resulting in a shift from
predominantly global, standardised approach to one more focussed on the local adaptations of
services and products? McDonald's has been acknowledged for its successful adaption of its
services and products (e.g. Edgar & Sedgwick, 2008), but is it only the strategy of
McDonald's that we are noticing, or are other major chains also following this development?
This paper is significant because it does not only include McDonald's. We will
endeavour to find out whether our personal observations are limited to a few companies or if
a more general shift within the quick service restaurants industry is in question. This will be
done by looking at 10, including McDonald's, different internationally available American
fast food chains that operate restaurants in different cultures around the world. We will
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examine inter alia products and services, advertisement, branding and why culture can pose
as a challenge to an expanding company.
The rankings of the top 10 American restaurants is based upon a chart, "The QSR 30"
(2012), made by the QSR magazine, containing information and data from 2011. 'QSR' is an
abbreviation for quick service restaurants, a term that describes restaurants with limited
service, e.g. no waiters. The numbers from the chart used to find the top 10 are of course
outdated; the intention was only to find highly ranked restaurants in terms of numbers of nonUS restaurants. The chart is also available as an appendix, labelled "Appendix A". The top 10
restaurants are referred to as our cases.
Our argument is considered via different conceptions, all closely linked to the issue of
globalisation and culture, e.g. McDonaldisation and localisation. We also apply concepts of
marketing, branding and advertisement, unto our cases in order to do comparative analysis on
the top 10 chains of restaurants.
The project is composed of several sections, the first being the "Theoretical and
Conceptual Framework". This section will endeavour to wholly describe the concepts and
theories relevant when considering large American companies in relations to the idea of
cultural adaption of products, i.e. globalisation, localisation and concepts of marketing. The
second section contains the introduction of the top 10 restaurants as cases, called "Cases:
Historical and Organisational Background". "Case Analyses" is next, wherein we try to apply
the different conceptions and theories onto the different cases, while considering the top 10 in
relation to each other and specially in comparison with McDonald's. A short "Discussion"
follows including loose and summarised highlights of the analyses as well as the viewpoints
of the authors.
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Methodology
This section will explain what methods have been used to answer the problem formulation of
this paper and then it will account for the theories used to support the conclusion and
analysis. It will also define some of the key words used in the analysis.
The method used in this paper is mainly qualitative and comparative. Since this paper is
based on case analysis, e.g. websites and advertisement there is a lot of text and a lot of other
data that need to be analysed and decoded in the analysis part.
This paper will look at the advertisement of the 10 companies used as cases to
see what if these are more local or global. Some of the things that will be looked at in the
advertisements are the spoken and written language.
McDonalds will be used as case zero and to see if the remaining 9 companies have
changed their approach to global advertisement and marketing after McDonald’s changed
their ways, this paper will look at the websites, menus and advertisement of the companies to
see if there are a change in these areas.
When using comparative research method the data collected, e.g. cases, are compared
and contrasted, it is impossible not to compare the data when following a qualitative method
(Mills, 2008, p. 101). In this paper the comparative approach will be evident in the analysis of
the 10 cases where they will be compared based on the same criteria. The goal of this
approach is to reach a conclusion based on the differences or similarities of the data selected
(Mills, 2008, p. 101).
Another area which this paper will look at to analyse the change with these
companies, is their annual reports from this last year and a ranking of them from a few years
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back. This will be done to see the change in their overseas numbers (mainly number of
restaurants).
Theoretical and Conceptual Framework
This section will define the terms and theories used in this paper. Many, if not all, of the
conceptions addressed below are under constant heavy debate, and there exists many disputes
regarding correct definitions and explanations. Definitions and overall perceived implications
of their existence of the conceptions below are employed differently across differing
academic branches and disciplines, making it possible to find many – sometimes
contradictory – characterisations of the same term. Additionally, many of the concepts are
very well-known and used colloquially, thus also possibly bringing mistaken or imprecise
meanings to mind.
Culture
A brief, clarifying definition for the concept of 'culture' is mere wishful thinking.
Depending on your branch of academia and context, different definitions and lines of
approach are utilised. We are examining a potential change in the business approach and
conduct of American multinational quick service restaurants overseas, which inevitably
encompasses the idea of culture. This is very clear, because there would be no issue with an
uniform approach of business operations if culture did not pose as an issue for e.g. correct
comprehension of product or service being promoted. In this case, it does not seem
meaningful to argue the differing existing definitions of culture as the term is very complex
and comprehensive. Because of the many contentions regarding the nature of culture, the
simple definition proposed by e.g. Williams (1976) of culture as a 'way of life' seems
appealing because of its simplicity (as mentioned in Hopper, 2007, p. 37). In light of the
purpose of this study, we will employ the loose depiction of culture as a 'way of life'. The
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simplicity of this quasi-definition is, however, slightly crippling, for which reason we further
argue that culture is the "(...) recognition that all human beings live in a world that is created
by human beings, and in which they find meaning" (Edgar & Sedgwick, 2008, p. 82) and that
"[c]ulture begins at the point at which humans surpass whatever is simply given in their
natural inheritance" (Edgar & Sedgwick, 2008, p. 82). Also relevant for us to consider is the
contention made by James Clifford (1992, 1997) that culture viewed as a static phenomenon
is rendered obsolete in light of the ease of travel – e.g. of people, information, and
commodities – that has been developed in relatively recent times (as mentioned in Hopper,
2007, p. 40). The significance of this argument can be paralleled with the ease of movement
of businesses, resulting in a plethora of multi- and transnational companies and organisations
that operate all over the globe. Similarly, it is also important to emphasise that internal
diversity exists even within a perceived singular culture – e.g. perceived "British" or
"Chinese" culture – which means that culture is also a multi-faceted entity subject to the
evolvement and corrosion of time (Hopper, 2007, p. 41).
Following the loose definition of culture being a 'way of life' as the point of origin
results in cultural flows as being ways of transmitting a way of life.
Globalisation
Globalisation is another contested term. However, while most do not question the
reality of e.g. the concept of culture, the very authenticity for globalisation is something
debated. Used under different criteria, this term if experiencing inconsistency in its use as
well as the very perceptions attached to the term (Hopper, 2007, p. 4). A single,
encompassing definition is difficult because globalisation features in many different
dimensions of research and it is often viewed from a point within three waves of analytical
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approaches, some which even question the legitimacy of the term globalisation (Hopper,
2007, pp. 6-10). For the purpose of this study, however, we will disregard the more general
theorising and instead focus upon the "(...) intersection of the global and the local within
different contexts" (Hopper, 2007, p. 3) in order to perceive the more tangible ways that
globalisation can be experienced. However, in order to clarify our thinking, we largely view
the concept of globalisation as the "[t]ransplanetary process(es) involving increasing
liquidity1 and growing multi-directional flows as well as the structures they encounter and
create" (Ritzer, 2011, p. 2), which importantly does not necessarily presume a growing sense
of global integration.
Considering globalisation more specifically within the dimension of economics, the
term can be further described as "(...) the simultaneous internationalisation and formalisation
of forms of thought and communication as a consequence of the standardisation of methods
of production, presentation, marketing, distribution and branding" (Edgar & Sedgwick, 2008,
p. 146). Following this logic, standardisation to ensure product uniformity would mean a
reduction of diversity and cultural conformity (Edgar & Sedgwick, 2008, p. 146), resulting in
a growing homogeneity.
McDonaldisation
McDonaldisation is a concept developed and coined by George Ritzer (1993; 1998).
In 1993, Ritzer defined his term as "the process by which the principles of the fast-food
restaurant are coming to dominate more and more sectors of American society as well as the
rest of the world" (p. 1) and while the subject is not McDonald's, Ritzer utilises the restaurant
and what it stands for as a case – a metaphor, an example – of the process coined
1
Defined by Ritzer (2011) as "Increasing range of movement of people, things, information, and places in the
global age" (p. 6).
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McDonaldisation (p. 1). Ritzer's theorising hinges upon the work of Max Weber on
rationalisation, in which he equates the rational principles of bureaucracy with modern
society, a situation which Weber saw potential for negative consequences within (Giddens,
Duneier, Appelbaum, & Carr, 2012). If Weber used bureaucracy as a model for
rationalisation, Ritzer's uses McDonald's as his, inter alia with the result of emphasising the
scope of sectors in societies susceptible to the influence of rationalisation, the major concern
being McDonaldisation posing as a force in cultural homogenisation (Ritzer, 2011, p. 167).
According to Ritzer, there exists at least four principles or dimensions of McDonaldisation
which include: (i) efficiency, (ii) calculability, (iii) uniformity (predictability), and (iv)
control through automation (technology substituting people) (Giddens et al., 2012, p. 177).
These are the principles that McDonald's as a company base their operations upon, ensuring a
standard of e.g. quick and friendly service along with a consistent, standardised product for
consumption, reminiscent of assembly line productions. This system minimises the role and
responsibility of the workers and maximises the efficiency and therefore also ensuring a
smooth customer experience (Giddens et al., 2012, p. 177). As such, the argument is that
McDonaldisation as a global process is likely to be harmful to cultures because it represents a
force for increasing global homogeneity (Ritzer, 2011, p.169; Giddens et al., 2012, p. 178).
Localisation
In the Cambridge online dictionary there are two definitions of localisation both
relevant for this paper since they define the marketing perspective (last quote) as well as a
more general business one: “The process of organizing a business or industry so that its main
activities happen in local areas rather than nationally or internationally.” (Cambridge Online
Dictionary)
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This first quote is not as relevant as the second one but it helps us to see the
difference between a glocal company and a local one. Since none of the companies is this
paper have their main activities on a local plan instead of international this definition shows
that they are not local. “The process of making a product or service more suitable for a
particular country, area, etc.” (Cambridge Online Dictionary)
This definition, which is more of a marketing definition, however is more suitable in
this case because many of the companies in this paper have a more local angle in some ways,
e.g. in regards to advertisement.
Glocalisation
“Glocalisation is a combination of the words 'globalisation' and 'localisation' and is used to
describe products and services that are both developed and sold to global customers but
designed so that they suit the needs of local markets.” (Professional English Online)
This is how the word is described in business terms and though this is not the
only definition of it, this is the most relevant for this paper since it focuses on how global
American businesses fits their products to different cultures and local markets.
Robertson (1995) means that glocalisation needs to replace the outdated globalisation
term in sociological terms because localisation and globalisation is not opposing factors but
collaborators and therefore the combined word is more fitting (p.32).
Even though there are different definitions of this word, when looking at it from different
discourses, one thing that is sure, is that this term comes from two other words often used in
the same context, globalisation and localisation. How the word then further is defined
depends on what usage it will have in the discourse, though the definitions are similar and
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have some pints in general, e.g. the collaboration/relation between local and global they are
not completely alike.
Advertisement
Oxford Learners Dictionary defines advertisement as “a notice, picture or film telling
people about a product, job or service” (n.d) and advertising as “the activity and industry of
advertising things to people on television, in newspapers, on the Internet, etc” (n.d). These
two definitions are of course closely linked as they describe the action and the product of the
same framework. Both are relevant to look at in relation to this product as advertisement is
used as empirical data and will be analysed and discussed later.
McDonald and Christopher (2003) have commented on how it is important to know
the target group before deciding on an advertising form, because different target groups will
see the advertisement different places and will react to different content in the add (p. 56).
They also have discussed how culture and religion have an effect on how advertisement is
perceived and that this might make it difficult for a company to make a global advertisement
(p. 68-69).
Branding
According to Bussinesdictionary.com branding is defined as:
The process involved in creating a unique name and image for a product in the
consumers' mind, mainly through advertising campaigns with a consistent theme.
Branding aims to establish a significant and differentiated presence in the market that
attracts and retains loyal customers (n.d.).
Branding is relevant in relation to this paper because all of the cases discussed has
strong and recognisable brands. And according to Douglas and Craig (2003) a strong brand is
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important to a company because it helps the customer to identify the company on the market
and if used correct can help to make the company more visible (p. 261).
Brands starting in other countries than the US, have a harder time going global
because they do not have the experience with advertising on a massive market and therefore
have weaker brands. If they want to become successful they have to become better at
cooperating across borders both within the same brand and between brands (Douglas &
Craig, 2003, p. 261).
Legitimacy
When discussing how companies are viewed and how they interact with the society they are a
part of, whether local or global it is relevant to look at the company’s legitimacy because this
will also affect how well the company is doing in a certain area.
The term 'legitimacy' comes from the word legitimate and according to the
Oxford Dictionary it is defined as “Conformity to the law or to rules” (n.d.). This is why what
makes a company legitimate might vary from region to region. The norms, laws and rules of
society and/or religion might be different from region to region. Therefore it is important for
the global companies to know of the cultural differences (as well as the laws of this country),
from where they already have restaurants, in the area they are opening a new restaurant.
Schuman (1995) once defined legitimacy as a socially constructed thing, this
means that a company’s legitimacy is judged in accordance with the norms, values and
beliefs of the social groups or society in which it is located (p. 573). This also supports part of
the Oxford definition and help us to understand why it is important for these companies not
only to conform to the laws put also the norms.
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Cases: Historical and Organisational Backgrounds
The following will provide a short background for the 10 cases that late will be analysed. It
will also present some more current facts about the cases. Lastly it will provide a short
briefing on the organisational structure of the 10 cases, as this will be compared and
commented on in the analysis.
McDonald's
The numbers below have been retrieved from McMap (2012 data) of the world at
May 25, 2014, except annual sales which is from Marketwatch.com (2013 data).
Number of US units: 14,157
Number of international units: 20,335
Annual global revenue: 28.11B USD
Present in number of countries: 116
Main product: Burger (BigMac)
Background:
The first McDonald’s restaurant was opened in 1940 by Dick and Mac McDonald’s. It
was a Barbeque restaurant and it opened in San Bernardino in California. It was not a
restaurant like the modern McDonald’s but a drive-in ("History Timeline", n.d.). In 1948
Dick and Mac give their restaurant a makeover and changes the menu, now it only have 9
items and one of them is the hamburger ("History Timeline", n.d.). McDonalds as a chain
was not founded until 15 years later by a man named Ray Kroc, when he, with the
McDonald’s brothers make the franchise McDonald’s and he opens a restaurant in Des
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Plaines Illinois. It is from this restaurant that the charismatic red, white and yellow colours
and the golden arches come ("History Timeline", n.d.). By 1962 McDonald’s open their first
in-door seating restaurant ("History Timeline", n.d.). By 1963 McDonald’s reaches its 500th
restaurant but still only in the American market ("History Timeline", n.d.).
The first nationwide commercial was aired in 1966 with Ronald McDonald ("History
Timeline", n.d.) who is still the mascot of the chain to this day. In 1967 McDonald’s opens
restaurants in Canada and Puerto Rico and is now an international franchise ("History
Timeline", n.d.). In 1969 the arches were remodelled and more emphasis were placed on
them instead of the red and white buildings ("History Timeline", n.d.). The first Ronald
McDonald house opened in 1974 in Philadelphia, Pennsylvania ("History Timeline", n.d.). In
1978 McDonald’s opens a restaurant in Kanagawa, Japan, this is the 5000th restaurant in the
chain ("History Timeline", n.d.). The 6000th restaurant opens in Munich, Germany only 2
years later, the same year McDonald’s celebrates their 25th anniversary. The following year
McDonald’s opens restaurants in Denmark, Spain and the Philippines. By the year 1983
McDonald’s have 7778 restaurants divided in 32 countries all over the world ("History
Timeline", n.d.). The McDonald’s hamburger makes the top 100 things America make best
list in Fortune Magazine in 1988 ("History Timeline", n.d.). When McDonald’s open their
first restaurant in Moscow more than 30,000 is served on the first day, the same year Ray
Kroc is named one of the “100 most important Americans of the 20th century” by Life
magazine ("History Timeline", n.d.).
When a restaurant opens in Warsaw, 2 years after the one in Moscow opens, it breaks the
record for opening day sales. In 2003 the first global ad campaign “I’m Loving It” is
launched. Five years later McDonald’s introduces a global packaging design, though not
completely uniform it is comprehensive and similar in many countries. By 2011 McDonald’s
now have restaurants in 119 countries.
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Organisational Structure:
At the top of McDonald’s is the CEO, then there are the people in charge of e.g.
supplies, franchises, finances and communication. Next is the presidents of the different
regions. There is a clear chain of command within McDonald’s. The presidents of the regions
are responsible for the restaurants in their region ("McDonald’s Leadership", n.d.)
The McDonald’s restaurants are divided into two; those that are owned and run by the
company and those that are franchised. The person franchising a McDonald’s restaurant have
to ask the regional manager for permission before changing something, who then have to
have permission from headquarters before approving it. This is a long chain of command and
slows down the process, but also protects the uniformity of the chain. (Pride, Hughes &
Kapoor (2011), p. 193)
Kentucky Fried Chicken
The numbers below have been retrieved from YUM! Brand annual report of fiscal
year 2013 ("Financial report 2013"), except the figure which is from the KFC home page.
Number of US units: 4,491
Number of international units: 9,460
Annual global revenue: N/A (YUM! 11.184M USD)
Present in number of countries: 115
Main product: Fried Chicken
Background:
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Colonel Harland Sanders opens his first restaurant 'Sanders Court and Cafe' in 1930 in
Corbin, Kentucky (Timeline, 1930), 6 years later he is made honorary Kentucky Colonel by
Kentucky Governor Ruby Laffoon because of his “contributions to the state’s cuisine”
("Timeline", n.d.). In 1939 the restaurant is listed in “Adventures in Good Eating” by Duncan
Hines. In 1940 Colonel Sanders comes up with the Original Recipe for his fried chicken
("Timeline", n.d.). In 1952 Colonel Sanders franchises his chicken and Pete Harman of Salt
Lake City is the first to buy a KFC franchise, he pays a nickel per chicken he sells to Sanders
("Timeline", n.d.). In 1955 Colonel Sanders sells the restaurant in Corbin because an
interstate highway is built that bypasses Corbin. At this time he is broke and decides to go on
the road with his Secret recipe to sell it to other restaurants ("Timeline", n.d.). In 1957
Kentucky Fried Chicken is sold in buckets for the first time ("Timeline", n.d.). By 1960 there
are 190 KFC Franchises with 400 units in the United States and Canada ("Timeline", n.d.). In
1964 there are 600 unit in the United States alone and Canada opens the first overseas unit, in
England. The same year Sanders sells his part of the company, but remains a spokesperson
("Timeline", n.d.). In 1971 the company is bought by Heublein Inc. at this time there are
more 3,500 franchises around the world ("Timeline", n.d.). 8 years late there are ca. 6000
KFC unit across the world ("Timeline", n.d.). In 1986 Pepsi co buys KFC and in 1997 KFC
becomes part of Tricon Global Restaurants, by 2002 Tricon is the largest restaurant company
in the world, at this time it changes name YUM! ("Timeline", n.d.). In 2008 KFC give the
colonel a makeover, changing his white suite with a red apron to remind customers that the
chicken is made (almost) the same way the colonel did it 50 years earlier. In 2009 the
Kentucky Grilled Chicken is introduced ("Timeline", n.d.). In 2010 not only does KFC
launch a new product, the double-down, they are also awarded the Greener Package Award
for their reusable side containers ("Timeline", n.d.). The year after they open their first ecofriendly restaurant and Colonelsanders.com is launched ("Timeline", n.d.).
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Organisational Structure:
KFC is a part of YUM! Brands and therefore they are part of a much bigger chain
than any of the other cases (except Pizza Hut). In 2013 YUM! Brands came with a new
strategy for their organisational structure for some of their chains, including KFC and Pizza
Hut. The new structure means that their international division and their US division were
joined, then the only division still individual are India and China, because of their growth
potential and strategic value ("YUM! News", 2013). Besides them being part of YUM!
Brands they have the same structure with franchises as McDonald’s.
Subway
The numbers from the table below are retrieved from the Subway homepage, except
the figure for annual global revenue which are from Forbes Magazine.
Number of US units: 26,620
Number of international units: 15,206
Annual global revenue: 18.1B USD
Present in number of countries: 106
Main product: Sandwich
Background:
In 1965 Fred DeLuca and Dr. Pete Buck opens “Pete’s Super Submarines” in
Bridgeport, Connecticut ("Subway Timeline", n.d.). In 1968 the name Subway is used for the
first time. In 1974 the first franchised restaurant in the Subway chain is opened. In 1975 the
first restaurant outside of Connecticut opens in Massachusetts and the signature sandwich
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BMT is introduced. In 1977 the Snak sub, later named the 6-inch, is on the menu for the first
time. The 200th restaurant opens in 1981 in Renton, Washington ("Subway Timeline", n.d.).
Within the next year a 100th more restaurants open in the Subway chain (Subway Timeline,
1982). In 1983 Subway is ranked 1 in the sub sandwich category by Entrepreneur Magazine
In 1984 Subway expands overseas and opens up shop in Bahrain ("Subway Timeline", n.d.).
A year later they celebrate the 500th restaurant opening and the opening of the first Subway in
Puerto Rico. In 1986 they open the first restaurant in Canada and in 1987 they open shops in
Hawaii and Bahamas. ("Subway Timeline", n.d.)
1987 is also the year they open the 1000th restaurant. In 1988 they have opened the
2000th restaurant and is ranked number 1 as a franchise opportunity by Entrepreneur
magazine. In 1990 the 5000th restaurant opens, they also open the first location in Mexico. In
1991 the first TV commercial is aired. 1992 Subway is served in schools for lunch and they
open two more restaurants in Japan and Saudi Arabia ("Subway Timeline", n.d.). In 1995
Subway opens restaurants in many new countries, such as China, Ireland, Taiwan, Jamaica
and Egypt among others. The year after they open in Denmark, Kuwait, United Kingdom,
Venezuela and South Arica among others. In 2000 Subway make the biggest addition to their
menu yet and Jared Fogle, a man who lost a massive amount of weight by eating only
Subway sandwiches for a year, becomes a kind of icon/spokesperson for Subway ("Subway
Timeline", n.d.). By 2002 subway has more restaurants than McDonald’s in the US. In 2007
the first eco-friendly restaurant in the subway chain opens in Florida. By 2011, with 35,000,
Subway has more restaurants worldwide than any other fast food chain. Subway restaurants
are by 2012 open in 100 countries around the world Subway Timeline, (2012). In 2013
subway launces the “Build your own virtual subway” challenge to inspire young
entrepreneurs ("Subway Timeline", 2013).
Organisational Structure:
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Subway have franchises just like McDonald's, and they also have a headquarter
located in the USA. They are, however, a part of Doctor's Association Inc. ("Subway Student
Guide", n.d.) which means that they, like Pizza Hut and KFC have an 'extra layer' in their
chain of command. Looking just at Subway the highest positions are in headquarter, then
comes the regional positions and then the local restaurant positions ("Subway Student
Guide", n.d.).
Pizza Hut
The numbers below have been retrieved from YUM! Brand annual report of fiscal
year 2013 ("Financial report 2013"), except the figure for presence in countries which is from
the Pizza Hut International homepage.
Number of US units: 7,846
Number of international units: 5,490
Annual global revenue: N/A (YUM! 11.184M USD)
Present in number of countries: 59
Main product: Pizza
Background:
The first Pizza Hut opened was opened in 1958 by brothers Frank and Dan Carney in
Wichita, Kansas. Within half a year after the first one opened they opened another one and a
year after the first opened there were 6 of them and they began to franchise the name that
same year (Smith, 2006, pp. 214-15). In 1963 many changes were made within the chain, one
of the biggest things were the new design of the buildings which were adopted by all the
restaurants. There were also a big change in the menu as they shifted to a thicker crust pizza.
The Big 10: Going Local?
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This was also the year where their first national advertisement aired (Smith, 2006, p. 215).
According to Pizza Hut's official Facebook page, Pizza Hut goes international in 1972 and
opens a restaurant in Canada (2012) and in 1973 Pizza Hut opened their first restaurant in
England ("Our History", n.d.). When the chain were bought by Pepsi Co. in 1977 the chain
was Americanised and their logo was changed to the red roof that it is today (Smith, 2006, p.
215). 20 years after Pepsi Co bought the chain, in 1997, Pizza Hut became part of Tricon
Global Restaurants, now known as YUM! Brands (Smith, 2006, p. 215). In 2005 Pizza Hut
had more than 12,000 restaurants in 86 countries around the world (Smith, 2006, p. 215).
Organisational Structure:
Since Pizza Hut, as well as KFC, is a part of YUM! Brands there is an additional layer
of leadership that is not present with the other cases. Pizza Hut was also included in the new
organisational structure plan of YUM! which were published in 2013 (YUM! News). This
means that their international and US units also were combined and that their India and China
divisions still are individual. Pizza Hut also have franchises like the other restaurants ("Pizza
Hut Franchise", n.d.).
Starbucks
The numbers from the table below are retrieved from Statistic Brain (2013), based on
data from 2012.
Number of US units: 10,924
Number of international units: 6,648
Annual global revenue: 13,29B USD
Present in number of countries: 55
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Main product: Coffee
Background:
The first Starbucks opened in 1971 in Pike Place Market in Seattle ("Company
Timeline", n.d.). In 1982 Howard Schultz becomes director of retail operations and marketing
at Starbucks after he, a year earlier, had become interested in the brand. After going to Italy
in 1983 and falling in love with the Italian coffee shops Schultz convinces founders of
Starbucks to give the idea a chance. In 1985 Schultz founds Il Giornale which sells coffee
brewed with Starbucks beans ("Company Timeline", n.d.). In 1987 Il Gionale becomes part
of Starbucks and the name changes to Starbucks Corporation. At this point there are 17
Starbucks shops, including some in Vancouver, Canada and Chicago (Company Timeline,
n.d.). By 1988 there are 33 Starbucks coffee shops open and a year later that number have
grown to 55 shops. In 1990 the company headquarter in Seattle is expanded and there are
now are a total of 84 stores. The first licensed store in an airport opens in 1991 at Seattle’s
Sea-Tac International Airport, there now are 116 Starbucks stores ("Company Timeline",
n.d.). In 1993 Starbucks opens a roasting plant in Kent, Washington and there now are 272
shops opened ("Company Timeline", n.d.). The first drive-thru is opened in 1994 and the
year after they open another roasting plant this time in York, Pennsylvania, now there are 677
shops open. The first shop to open outside of North America opens in Japan in 1996, this year
they also expand to Singapore and there now are 1015 Starbucks ("Company Timeline",
n.d.). In 1998 the Starbucks webpage is launched and the first European Starbucks opens in
England. There are at this time 1886 Starbucks around the world. In 2000 Howard Schultz is
made chairman and chief global strategist the number of stores are now 3501 shops open in
Australia, Hong Kong and Saudi Arabia, among others ("Company Timeline", n.d.). In 2001
Starbucks releases what they call “ethical coffee-sourcing guidelines” which they developed
with Conservation International ("Company Timeline", n.d.). Starbucks acquires Ethos water
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in 2005 and the number of Starbucks passes 10,000, it is now 10,241. In 2007 they eliminate
all artificial trans-fat in the menu ("Company Timeline", n.d.). The number of stores around
the world are now 15,011 ("Company Timeline", n.d.). In 2010 they offer free Wi-Fi in their
shops and expand on the menu with two new lines of products and they now have 16,858
shops around the world ("Company Timeline", n.d.). In 2011 Starbucks celebrate their 40th
anniversary with an update of brand identity and opens shop in Guatemala. As of July 1, 2012
there are 17,651 Starbucks around the globe ("Company Timeline", n.d.).
Organisational Structure:
The organisational structure of Starbucks is slightly different than the other cases, as
they do not franchise their stores, but all owned by the company itself. In 2011 they
announced a new structure for their international division ("Starbucks Financial Release",
2011). Now there are three regions they are EMEA (Europe, U.K., Middle East, Russia and
Africa), Americas (United States, Canada, Mexico and Latin America) and China and Asia
Pacific (all Asia pacific markets and China) ("Starbucks Financial Release ", 2011). Each of
these three regions now have a president, who have to manage the region they are appointed
and oversee the shops in this region. Each of these presidents answers to the CEO of
Starbucks. ("Starbucks Financial Release", 2011).
Burger King
The numbers below have been retrieved from the 2013 annual report of Burger King
Worldwide Inc., located at invester.bk.com. The numbers are based on information from
December, 2013.
Number of US units: 7,436 (*including Canada)
Number of international units: 6.231
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Annual global revenue: $1,146.3M USD
Present in number of countries: 972
Main product: Burger (WHOPPER®)
Background:
Generally acknowledged as the second largest burger fast-food chain in the world
(second to McDonald's), the Burger King franchise was founded by James McLamore and
David Edgerton in 1954 in Miami, Florida. However, McLamore and Edgerton were not the
original founders of the entire operations, but rather bought into the original franchise called
Insta-Burger King as founded in 1953 by Keith J. Kramer and his wife's uncle, Matthew
Burns in Jacksonville, Florida (Smith, 2006, pp. 27-28). Kramer and Burns focussed their
stores around a cooking device called the Insta-Broiler, which they required all franchises to
have. McLamore and Edgerton went on to purchase the company and franchising rights and
changed the name to simply Burger King after having opened. Furthermore, they changed the
Insta-Broiler to a flame broiler, because they found problems with the original system. The
new system largely imitated the effects of meat cooked over charcoal, and the method of
flame-broiled beef is by Burger King themselves declared to be the legacy of Burger King
("About BK®", n.d.; Smith, 2006, pp. 27-28). Like most of the other fast food restaurants,
Burger King has a mascot. The King, a cartoon character wearing a royal robe and a crown,
was created by McLamore and Edgerton and was introduced in 1955 on a sign of the first
Burger King store in Miami (Smith, 2006, p. 168). As a character meant to entice children,
the franchises began to give out paper crowns, which has been in practice ever since (Smith,
2006, p. 28) and when animated advertisements were released in 1960, it was with the slogan
2
Taken directly from the annual report (Form 10-K) though varying numbers available. Burger King is present
on virtually any US military base in the world.
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"BURGER KING®, Where Kids Are King!" ("About BK®, n.d.) . The 'Whopper', the
signature Burger King burger, made its first appearance in 1957 in the stores and is still one
of the most popular and recognisable Burger King menu. While the 'Whopper' was a more
costly item than what was generally available at e.g. McDonald's, the sandwich grew a big
following and more restaurants began to expand upon their menus (Smith, 2006, p. 99) and
the 'Whopper' became the Burger King's signature product, often underlined by the company
with the tag "Home of the Whopper" (Smith, 2006, p. 27). Like the original company of
Insta-Burger King, the company also began to franchise its restaurants, an endeavour started
in 1961 under the name "Burger King" (Smith, 2006, p. 28). Eventually, the novelty of eating
in your car wore off and Burger King grasped the opportunity to develop indoor seating areas
in 1967, a year before McDonald's did the same (Smith, 2006, p. 28). Also in 1967, the
company was acquired by the Pillsbury Company, who were inter alia responsible for the
introduction of the famous slogan "Have it Your Way" in promotional efforts (Smith, 2006,
p. 28). Because of a large business merging in 1997, ownership of Burger King suddenly
became European, but only until 2002 where American companies purchase the company
again ("About BK®, n.d.). Like many of the other restaurant brands, Burger King is involved
with philanthropy. The 'BURGER KING McLAMORESM Foundation' aims to positively
impact local communities, contemporarily by efforts to advance education in the US, Canada
and Puerto Rico ("Our History", n.d.). After a brief foray from private sector into a publicly
traded corporation in 2006, the Burger King corporation was purchased by the investment
firm 3G in 2010. They continue to own the corporation today ("About BK®, n.d.).
In 2008, Burger King introduces apple slices as an alternative to French fries in
Kids' Meals ("About BK®, n.d.).
Organisational structure:
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27
Burger King is almost exclusively a franchised operation. Only 52 establishments are
company-owned and all 52 are located in Miami, Florida in the US, meaning that almost
100% of Burger King restaurants are franchisee owned and operated. These outlets are inter
alia used for experimentation and testing of new products and systems ("Form 10-K BKW",
2014). The top-most people in the corporation are of course the CEO and the Board of
Directors.
The company operates within four geographic divisions: (i) US and Canada; (ii)
Europe, the Middle East and Africa (EMEA); (iii) Latin America and the Caribbean (LAC)
and (iv) Asia Pacific (APAC), wherein US and Canada operate 55% of all Burger King
outlets ("Form 10-K BKW", 2014). The management team consist of the Chief Executive
Officer (CEO) and a list of Executive Vice Presidents (EVP), four of whom are Presidents
over the respective geographic divisions mentioned above ("Management", n.d.). Franchise
agreements can be made for each restaurant, but the company has to an increasing degree
entered into international master franchise agreements that give the franchisees exclusive
development rights in their region ("Form 10-K BKW", 2014). This means that several
restaurants may be owned by the same franchisee while still being managed by different
managers at floor-level. Burger King requires managing owners and restaurant managers to
undergo training programmes provided by the company, inter alia to ensure the standard of
Burger King worldwide remains consistent. The company has "(...) uniform operating
standards and specifications relating to selection of menu items, maintenance and cleanliness
of the premises" ("Form 10-K BKW", 2014, p. 8).
Internationally, franchises like Burger King are subject to the laws and regulations of
the countries that they enter, e.g. laws concerning franchising, health and sanitation. One
instance of such a consequence is the fact that the outlets of Burger King franchise are named
'Hungry Jack's' in Australia ("Form 10-K BKW", 2014).
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Domino's Pizza
The numbers below have been retrieved from the 2013 annual report of Domino's
Pizza Inc., located at phx.corporate-ir.net. The numbers are based on information from
December, 2013.
Number of US units: 4,986
Number of international units: 5,900
Annual global revenue: 1,802.2M USD
Present in number of countries: >70
Main product: Pizza
Background:
The Domino's Pizza Inc. of today has its foundation in a Michigan-based pizzeria
called Dominick's, which the Monaghan brothers, Thomas and James, bought in 1961. Soon
James traded his share to Thomas, and in 1965 Thomas renamed the store Domino's Pizza
(Smith, 2006, pp.77-78). The store was soon known for delivery as their main selling point –
pizza as a food product is ideal for delivery as the meal does not spoil or become soggy from
the time of transport. Delivery and patented Heat Wave transportation bags came to innovate
the pizza industry and consequently forced others – e.g. Pizza Hut – to follow along the trend.
Domino's gained their first international stores in the 1980s, starting in English-speaking
countries such as Canada, Australia and England, and in 1985 with the first Asian outlet in
Japan. Domino's Pizza International, which is responsible for the franchising internationally,
celebrated the opening of the 1000th store outside of the US in 1995, only 2 years later
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reaching store number 1500 ("History", n.d.). As of December 2012, Domino's has 10,886
stores worldwide, of which 5,900 are international franchise stores ("Domino's Pizza 10-K",
2014). Before the 1950s, pizza was considered to be a foreign, ethnic food in the US and as
such different from the previous American fast foods (Smith, 2006, pp. 98, 214). While
Domino's seems to have been a forerunner in some areas, e.g. delivery, Domino's is still
considered to be only the second largest pizza chain within the US ("Domino's Pizza 10-K",
2014). Similarly, Pizza Hut also has around 2,000 more outlets than Domino's, as evident in
the ranking chart (Appendix A).
Organisational Structure:
Domino's outlets are 96% franchise-owned ("Domino's 101", n.d.). Internationally,
geographic segments that Domino's are present in are lead by a master franchisee, similarly to
Burger King, who then has exclusive operating- and sub-franchising rights in specific areas.
The largest franchisee operates 1,270 stores in total ("Domino's Pizza 10-K", 2014).
Domino's has a Board of Directors and a CEO at the head of their corporation, the
CEO also being the president of the company. There are several EVPs, all with different
areas of expertise. Domino's have only two EVPs responsible for their geographic segments,
roughly divided into 'Team USA' and 'International' ("Management profile", n.d.). Domino's
emphasise in their 10-K annual report that "(...) international franchisees adapt our standard
operating model, within certain parameters, to satisfy the local eating habits and consumer of
various regions outside the United States" ("Domino's Pizza 10-K", 2014, p. 10). Each
franchisee own and operate their own store or stores, but are required to operate in
compliance with Domino's policies, standards and specifications, e.g. concerning menu items,
supplies and decor. Furthermore, franchisees are required to complete some training
programmes, and are given access to training materials intended for store managers and
employees ("Domino's Pizza 10-K", 2014).
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Baskin-Robbins
The numbers below have been retrieved from the 2013 annual report of Dunkin'
Brands, located at invester.dunkinbrands.com. The numbers are based on information from
December, 2013.
Number of US units: 2467
Number of international units: 4833
Annual global revenue: 7425,7M USD
Present in number of countries: 46 (excluding US)
Main product: Hard-serve ice cream
Background:
Baskin-Robbins, Starbucks, Dunkin' Donuts and Dairy Queen can be said to differ
from the usual sort of establishment brought to mind when the term 'fast food' is mentioned.
However, being quick serve, internationally recognised and available food and beverage
establishments, they can be considered to fit into this category along with e.g. McDonalds.
Baskin-Robbins is different because it sells mainly premium ice cream. Irvine Robbins and
brother-in-law, Burt Baskin, partnered up in 1946 for what we today know as the BaskinRobbins stores, which started out in the state of California (Smith, 2006, p. 19). The partners
began to franchise their business and by 1949 there were over 40 stores in Southern
California and the first Baskin-Robbins outside of California opens in 1959, in Arizona. In
1971, the first Canada-based Baskin-Robbins opens and 2 years later a Japanese branch is
established. In 1974 Baskin-Robbins reaches Europe by opening an outlet in Belgium and the
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next years are marked by the influx of outlets in many different countries around the world
("The Journey", n.d.).
The specialty of Baskin-Robbins has been the same almost from the start. Robbins
started out with a flavour-set of 21 flavours, but in 1953 the business started to advertise their
31 flavours – one flavour for each day, making it possible for a customer to try a new flavour
ice cream every day (Smith, 2006, p. 19). Baskin-Robbins also become famous for
commemorating different events and holidays with specialties. For example, in 1969 when
the first people set foot on the moon, the company introduced the Lunar Cheesecake to
celebrate. Sports-oriented flavours and specialties have also been known to appear ("The
Journey", n.d.; Smith, 2006, p.19).
Baskin-Robbins is currently owned by Dunkin' Brands (also owner of Dunkin'
Donuts), which is a quick service restaurant franchisor company ("Dunkin' Brands About
Us", n.d.).
Organisational structure:
Internationally, Dunkin' Brands mainly conduct business through master franchisees
and through joint ventures between the company and a local, both controlling licensed areas.
In high potential markets, e.g. United Kingdom and China, Dunkin' Brands are adapting to a
model with multiple franchisees in one country ("Dunkin' Brands 10-K", 2014). The
franchisee is responsible for keeping the operation of their stores in compliance to the brand
standard.
The CEO and chairman of the Board of Directors is within Dunkin' Brands the same
man. Beyond the CEO and the Board, Dunkin' Brands only mentions two Presidents whom
are appointed to different tasks. One is responsible for the direction and execution of Baskin-
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Robbins within the US and Canada as well as both Baskin-Robbins and Dunkin' Donuts
operations in China, Japan and Korea. The other oversees Dunkin' Donuts operations within
US and Canada, as well as both Dunkin' Donuts and Baskin-Robbins operations within
Europe and Latin America ("Dunkin' Brands Leadership", n.d.). Furthermore, the latter is
also responsible for the overseeing of the global franchising and development of both Baskin'
Robbins and Dunkin' Donuts ("Dunkin' Brands Leadership", n.d.).
Dunkin' Donuts
The numbers below have been retrieved from the 2013 annual report of Dunkin'
Brands, located at invester.dunkinbrands.com. The numbers are based on information from
December, 2013.
Number of US units: 7677
Number of international units: 3181
Annual global revenue: 1,875.7M USD
Present in number of countries: 33
Main product: Coffee and doughnuts
Background:
Dunkin' Donuts restaurants focuses on coffee and baked goods as their products. Like
Baskin-Robbins, Dunkin' Donuts is a subsidiary of the franchisor Dunkin' Brands. The
company started out in 1948 as a doughnut shop in Massachusetts owned by Bill Rosenberg
with the specialty of its time being the serving of breakfast foods (Smith, 2006, pp. xxxvi,
26). Rosenberg changed the store's name to Dunkin' Donuts in 1950 and began to franchise
his operations in 1955 (Smith, 2006, p. xxxvi) and by 1986 there were already 6,900 Dunkin'
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Donut stores in the US. Interestingly, the company's first endeavour into the international
market was in Japan in 1970, a year before McDonalds reached the Japanese soil (Smith,
2006, p. 84).
Organisational Structure:
Due to the fact that both Baskin-Robbins and Dunkin' Donuts brands are owned by
Dunkin' Brands, franchising procedures and hierarchy virtually is identical.
Dairy Queen
The owner of Dairy Queen, Berkshire Hathaway Inc., is a conglomerate and their
financial records of Dairy Queen are merged with records of all their other businesses . As
such, it was not possible to acquire accurate revenue information for the fiscal year 2013 as
done with the other restaurant brands.
However, in order to facilitate comparison to the other brands, two tables compiled by
qsrmagazine.com have been used to insert figures into the template below. Figure for number
of US units has been taken from the 'QSR 50' (2013), a ranking of quick-service restaurants
for the year 2012. International units figure is from the 'QSR 30' (2012) based on 2011 data,
while global revenue is calculated by adding domestic system-wide sales listed in 'QSR 50' to
the non-US system-wide sales recorded in 'QSR 30'. Figure for the company's global
presence is taken from the homepage of DQ ("FAQ: General and history", n.d.).
Number of US units: 4,462
Number of international units: 1,548
Annual global revenue: 2,940.0M USD
Present in number of countries: 22
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Main product: Soft-serve ice cream
Background:
As described by Andrew F. Smith (2006), Dairy Queen (henceforth, DQ) has a
complex history as its beginning does not start with a store or even a cart. DQ started out with
an ice cream product developed by the McCullough father-son duo in Illinois. The
McCulloughs experimented in order to maximise the taste of ice cream by serving it at higher
temperatures than usual, which would eventually be known as soft-serve ice cream. The
McCullough named their product Dairy Queen, but it was a franchisee of the product named
Sherb Noble who went on to open 10 outlets named Dairy Queen in the span of a year, from
1940 to the start of World War II in 1941 (p. 69). Initially the brand was not franchised by the
McCulloughs' parent company, but rather loosely licensed out to interested parties, meaning
that the standardisation usually seen in franchised restaurants was not present. Independently
owned and managed, DQ made the slogan "Nationally Known, Locally Owned". The
franchise grew incredibly fast, growing from the pre-war 10 stores to a whopping 2,600 in
1955. Like many other American food and beverage companies, DQ expanded to Canada in
1953 for international stores and furthermore to Japan in 1972 (Smith, 2006, p. 69-70).
DQ has been a subsidiary of Berkshire Hathaway, Inc. since 1996, which is a holding
company involved in many and diverse business activities. As such, DQ is a privately held
company ("FAQ: Store and restaurant", n.d.)
Starting out as an ice cream parlour, the brand has expanded to include foods such as
pizza, salads and burgers ("About us: an edible DQ® encyclopedia", n.d.). Like some of the
other brands, DQ are involved in philanthropic matters and has been a national sponsor of
Children's Miracle Network Hospitals since 1984 in the US.
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Organisational Structure:
Berkshire Hathaway Inc. are not especially forthcoming with descriptions of their
franchise operations for the DQ company. All franchising information listed is at the DQ
homepage. DQ is almost a 100% franchised, operating only 3 US-based company-owned
establishments ("QSR 50", 2012). DQ emphasises that most restaurants are individually
owned and operated and may therefore differ in e.g. promotion activity. The restaurant
operator is at liberty to decide own store policies, including the participation in national or
regional promotions ("FAQ: Store and restaurant", n.d.). Internationally, DQ provides
regional corporate support for franchisees to help them make the DQ concept a success in
their market. Support is offered in e.g. marketing and operations ("Franchise with us:
International opportunities", n.d.).
McDonald's As a Trendsetter
This part of the paper will look at the things McDonald’s have done through the years to stay
ahead of competition and will function as a stepping stone into the analysis.
McDonald’s is one of the biggest fast food chains in the world in almost every
aspect, although Subway has more restaurants around the world. Therefore there also is a lot
of attention on them and what they do to stay big and ahead of the competition.
Already in the 70s and 80s McDonald’s was a pioneer in their focus on children as a
target group, and many other larger fast food chains copied the idea of advertising for
children (Smith, 2006, p. 174). Also in regard to menu items were McDonald’s ahead of the
competition, e.g. when they launched the quarter pounder and the breakfast menu (Smith,
2006, p. 174).
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One of the reasons McDonald’s became as big as it did is because it saw an
opportunity and took first with the baby boomer generation and when women entered the
workforce. And later when globalisation became a trend in the 70’s and 80’s
(Mourdoukoutas, (2013).
However, in the late 90s to early 2000s McDonald’s ran into problems and had to
reinvent their business model and came up with “fast and convenient” which was a drastic
change to their products – the food and the restaurants – to meet the demands of the
costumers (Mourdoukoutas, (2013).
There is however proof that not all aspects of McDonald’s is global, e.g. in the
commercials aired in the different countries where the spoken and written language is in the
mother tongue of that region and not English. For example the commercial "McDonald’s Iced
Fruit Smoothies – Zieh dir den Sommer Rein" (2014), which is a commercial from Germany
for their smoothies. Another example is the small differences in the menus and services of
McDonald’s around the world, which will be discussed later.
Case Analyses
This section will answer the research question and analyse the 10 cases to see if a change
from a global marketing strategy to a more local or glocal one is observable or if it only is
McDonald’s that have undergone a change in this area in recent years. Several things will be
looked at to determine this, e.g. advertisement and menus to see what cultural differences
there might be in these. The cultural differences might show a more glocal approach.
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Advertisement and Branding
One of the things that will be analysed and discussed in their advertisement is the
written and spoken language, as well as the item advertised for. To do this the paper will look
at advertisement from different countries from different regions of the world. One of the
things that is worth noting about these companies is that they all have a strong brand to base
their advertisement on. McDonald’s will be used as "case zero" because it is the largest in
several respects, although Subway has more restaurants and because they mostly are ahead of
their competition, at the very least in terms of revenue. This part of the analysis will also look
at branding since advertisement is used to promote a brand and make it legitimate and strong
it is relevant to look at these together.
McDonald's
Firstly we will look at McDonald’s and see what kind of change
there have been here. Since this the company the other will be compared to this will set as a
base of the analysis. In this category we find that even in the TV commercials from the 90s
one of the major themes is the children ("McDonald's Happy Meal Ad – 1994", n.d. ). This is
a theme that is general for most of McDonald’s advertisement, and according to Smith
(2006), have been ever since Ray Kroc realised that children exercised influence within their
families. As such, even though the children did not have purchasing power, in 1966 Ronald
McDonald was introduced as the mascot of McDonald’s (Smith, 2006, p. 174).
When looking at the McDonald’s commercials from the seven different countries it is worth
noting the language spoken in the TV commercials the same language written in the printed
advertisements. In the TV commercials everything said is in the local tongue and what is
written on the screen is also in the local tongue, even the slogan “I’m loving it” is translated
("McDonald’s Iced Fruit Smoothies", 2014). When looking at the printed advertisement
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when there is text on them it is mostly in English even if the advertisement is from a country
where English is not the first language, like this one from Sweden where all the menu items is
presented in English and ended with the phrase “welcome to a festival that goes all year
round” (Appendix B). But most of the time it just a picture with the logo, the golden arches,
on it, e.g. like this advertisement from France where there is a drawing of a burger and then
the golden arches of McDonald’s (Appendix C). This is one of the reasons why a strong and
recognisable brand is a good thing and for a brand to stay strong the company have to be
legitimate and have the trust of the community in which it is present.
Comparison and Contrast
When looking at some of the other restaurants on
this list, the trend to have, if not only the children, then at least at families with younger
children, as the target group for their commercials is also evident. Other restaurants, like
Burger King also have a mascot directed at children (Smith, 2006, p. 12).
An example of local advertisement from another company, is one from Pizza Hut in
Brazil, located in the restaurant where an advertisement for a new strong sauce (Appendix D)
all in Spanish. They do, however, also have advertisement where the written language is in
English even though it is from e.g. Thailand where Pizza Hut advertise for their delivery of
pasta (Appendix E).
When looking at these companies and their advertisement it becomes evident that
local advertisement have been around for a long time. As seen in a commercial from the
Netherlands aired in the 90’s, where the spoken language is Dutch ("McDonald’s
Commercial (Zusje) from the 90s (Dutch)", n.d.), but it seems that recently more of the
English language have sneaked into the local advertisement, where it before would be in the
local tongue. This commercial from Hong Kong were the song is in English but the voice
The Big 10: Going Local?
39
over is in the local tongue ("Mini Food Magnet TVC", n.d.) shows a mixture of local and
global represented by the different languages. This is also a symptom of glocalisation, where
something before were local or global, the lines seems to be more blurry today and
multinational companies seem to be more flexible than before in the way they mix local with
global. Another company that have embraced the multilingual approach is Starbucks, even
though they are very uniform and Americanised in most aspects, when it comes to
advertisement they have embraced other languages as a part of it, as seen in their Braille
commercial were the original one is in Spanish, but it then have been translated to English
and used elsewhere (Appendix F).
As said, all of these companies have strong and recognisable brands one of the
reasons for this might be that they are American and therefore used to advertising on a large
market and already have a large base of customers. A brand that is already recognised by
many might have a better chance of expanding and gaining recognition in new areas because
of their reputation. This means that even though they might have difficulties adapting to the
different cultures at first, a strong brand might help them draw in customers despite this.
Starbucks is an excellent example of a company that seemingly does not adapt to the local
culture but still attracts guests, this might be because of their brand being strong and
recognisable.
Burger King is a generally recognised brand and logo. The Burger King poster
commercial from Sweden (Appendix G) shows what appears to be the container of soluble
tablets, typically ingested for mild pains and stomach troubles, upon which the text
"WHOPPER® 113g, A good start to the day after" is printed. The screw top has the burger
logo of Burger King printed. The design is very simple, making it tempting to mention the
famous Scandinavian minimalist design preferences. The language used is English despite
being created by a Swedish based advertising agency, maybe because high proficiency rates
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in English language make it unnecessary or as an expression of a lesser effort towards a more
localised method of advertisement. However, the relatively subtle theme of the advert is a
good match for a country like Sweden, in which legal drinking age is relatively low and
drinking itself is an accepted and encouraged act. Of course, "the day after" refers to the
general unease and sickness that comes as a consequence of alcohol consumption. A
reference like this would likely be considered completely inappropriate in e.g. Muslim areas,
wherein ingestion of alcohol is at the least frowned upon. This showcases a sense of cultural
awareness.
The selected example of advertisement for Domino's Pizza is from the United
Kingdom. This advertisement is also created locally by an UK-based agency. The print
(Appendix H) is a manipulated picture of a normal intersection. Through retouching of the
photograph, the agency has made the scene look like a screenshot of Google's interactive
mapping system, Google Maps. The upright pizza slices are supposed to jokingly represent
locations of Domino's, of which there of course are far too many. The point is given in the
small text on the bottom right: "Order on the go with the Domino's app". This advertisement
simultaneously advertises the brand and its products itself as well as the ease of ordering
Domino's, which is not dependent on your location. The language is unsurprisingly English.
The Domino's brand logo in the topmost left corner is surprisingly small, possibly indicating
strong confidence as a company, placing most of the brand recognition upon the pizza slices.
Compared to the typical McDonald's commercials where there is a lot of focus on
grasping the attention of children, this advertisement seems more oriented to the young adult,
technologically savvy audience.
Baskin-Robbins is a very popular store in South Korea ("Dunkin' Brands 10-K",
2014). The commercial selected here is from South Korea and it is a video with outtakes from
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the music video of the song "Abing Abing" performed by Korean girl group, Orange Caramel
("[CF] Orange Caramel – Abing Abing", 2014). The song itself is about the oppressing heat
of Korean summers and how eating a Korean ice cream specialty – called 'Patbingsu', thereof
'Abing' – is great for cooling down. Korean Baskin-Robbins must be presumed to carry these
items in their stores, and at least three different concoctions are promoted. The girls of the
band are promoting by singing this song, showcasing different variations and even by
wearing costumes with inter alia strawberries, Oreos and chocolate sown on. The language is
exclusively Korean, except for the company name ("[CF] Orange Caramel – Abing Abing",
2014). Of course, celebrity endorsements like these are beneficial to both Baskin-Robbins
and to Orange Caramel, e.g. by exposure. Furthermore, there is a huge tradition for celebrity
endorsement commercials in Korea, marking this as a typical – if especially well-placed –
Korean commercial.
Typically, like many Asian countries, the expressions and general feel of the
commercial is sweet and cute. A direct translated version of this into English would make
many so-called Westerners cringe with embarrassment. Again, despite the cutesy production,
this commercial is actually not directly targeted at young children, but is likely to attract all
ages in Korea, though perhaps most intensely the teens and twenties.
An advertisement for Dunkin' Donuts comes from a Spanish advertisement agency
(Appendix I). The advertisement is in the form of a print, maybe a poster, depicting the
drawing of the inside of a house, a direct viewer perspective unto a paper titled "Mortgage",
as well as the photographic representations of a Dunkin' Donut coffee and doughnut, each of
whom are holding a pen each while holding drawn-on hands (Appendix I). The text is in
English and reads: "Deal forever 1,70€, Coffee & Donut always together" which denotes the
promise of a package deal consisting of coffee and donut for the price of 1,70€. It seems
aimed at an older clientele than typically considered of e.g. McDonald's or Baskin-Robbins's,
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considering the coffee. The fact that the advertisement is in English is sort of surprising, but it
is not possible to say whether it is the decision of the Spanish agency or orders from above.
However, the words are fairly simple and straightforward, and we think it is possible to
deduce the meaning of the print based on the two figures, the contract and the mentioning of
1,70€. Being relatively simple, this commercial may be suitable for many cultures and
countries. Again, Dunkin' Donuts is not precisely appealing to young children with this, but
rather the general coffee-drinking crowd, of which perceived appropriate age of course may
differ across the globe.
Products and Services
In this section the products and services, e.g. menu, of the companies will be analysed and
compared, and since there a many clear and interesting differences between the countries
depending on the culture this part will try to look at as different cultures as possible. When
analysing the menus of the companies one of the main sources of information is of course the
local homepages, where they have promotions and menu overview.
McDonald's
One trend in the menu at McDonald’s that have been observable
on a global level is the new and healthier items added to their menus ("Nutrition Choices",
n.d.). This is proof that some things are still decided on a global level and not left to decide
for the different regions. Most of the items on the menu are the same worldwide, though with
small differences. There are, however, countries (or cultures) where there are distinct
differences in the menu, because of laws, religion or cultural norms that the company had to
adapt to if they wanted to survive on that market. For example is there no beef on the menu
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in India, because the cow is a holy animal there ("McDonald’s India About", n.d.), in Hong
Kong you can get married at McDonald’s ("McDonald’s Wedding Party", n.d.) and in South
Korea McDonald’s delivers ("McDelivery", n.d.).
Comparison and Contrast
The trend of focusing on the children, which were
visible in the advertisement is also evident in the menus of these chains, as many of them
have a kids menu (e.g. Subway), which in one way or the other differs from the rest of the
menu. And even though small things within this menu may differ the general idea of it stays
the same all through the chains.
Some of the changes in menus and services, at some of the chains, is in the variety of
the menu, for example Subway where there are more subs on the menu in US ("All
Sandwiches", n.d.) than in Germany ("Alle Sandwiches", n.d.) and even though there is a
kids' menu both places and they both come with a back pack the themes are different, in
Germany it is the Muppets ("Kids’ Pak", n.d.) and in US it is Disney’s Maleficent ("Fresh Fit
for Kids", n.d.). Another company that have a more remarkable difference in menus is
Kentucky Fried Chicken, where the famous 21 piece bucket is available in the Philippines
("Bucket Meals", n.d.) but not in United Kingdom ("Our Food", n.d.).
When discussing these companies and the differences between their local restaurants
it is worth noticing that the differences mostly are cultural, e.g. when looking at Pizza Hut in
Germany and Turkey, it is evident already on overview of the different kinds of food that
they are different because Turkey ("Flatbreads", n.d.) as category called flatbreads that is
nowhere on the German side ("Menüs", n.d.).
The differences in products and services are not only a sign of how global or local a
company might be, but also a sign of how well they adapt to the cultural differences they
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experience when expanding into new territory. If a company does not adapt their menu to the
culture they might have to close soon after opening because no one will buy what they sell,
again it is worth noting that Starbucks seems to have success even though they do not adapt
and therefore there must some other reason why the customers keep coming back.
When discussing the differences between the different local divisions of these
restaurants it is important to notice that Starbucks is the odd one out. They have the same
menu worldwide, they have no small differences like the other companies have, no cultural
differences. But not only in the menu is Starbucks different from the rest, Starbucks is not a
franchise but allow people to rent their property if they follow their rules ("Starbucks
Financial Release", 2012).
When looking at Starbucks advertisement is also worth noticing that the only
Language they have in their commercials is English, like this one from Hong Kong in all
English ("Starbucks Coffee: Perfection", n.d.). When looking at printed advertisement it is
different though as there are other languages used here, one example is from Brazil where
they use coffee beans as Braille text and then have a Spanish explanation (Appendix F).
When trying to examine the Chinese menu of Dairy Queen, we were met with –
unsurprisingly – with a lot of Chinese text that we are not able to read. Therefore, we looked
to QSR Magazine to find information on how Dairy Queen is being integrated. Of course, we
could see that the language aspect was fully adapted. According to Brad Houser (executive
vice president of international Dairy Queen), the Chinese market has kind of rebranded itself
so that the Shanghai and Beijing locations have become the "Starbucks of ice cream"
("Growing global", 2010). This in itself is a rebranding as Houser himself mentions that
Dairy Queen is sort of considered a senior citizen place in the US. Houser also praises the
Chinese work ethic and claims that franchises are much quicker to set up than domestically in
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the US, and further mentioned that because there is no strict provisions for layout plans, the
stores are adjusted to the needs of the customers ("Growing global", 2010). On the subject of
menu, Houser states that Dairy Queen is adapting to the local taste, e.g. in China by offering
green tea flavourings as well as generally smaller portion sizes ("Growing global", 2010).
Franchising in Relation to Glocalisation
As mentioned in the description of McDonaldisation earlier, a lot of blame for inter
alia growing global cultural homogenisation is being put on the McDonald's company and
their business practices. While Ritzer (1998) does acknowledge the fact that e.g. McDonald's
in recent years (meaning late 90s) make local adjustments to products and services offered to
suit the local environment. He nevertheless perceives this trend as proof for and not against
the McDonaldisation theory (Ritzer, 1998, p.77), an opinion we take a critical stance towards.
As we have described, localisation is basically the antithesis of the process of
McDonaldisation in the sense that localisation comprises the process of making products and
services more appropriate for specific markets, e.g. regions and countries. Likewise, Hopper
(2007) mentions the flexibility and cultural sensitivity of McDonald's as something which
undermines the McDonaldisation thesis (p. 105). Also mentioned, glocalisation is the meeting
of the terms globalisation and localisation. As Robertson (1995) argues, glocalisation should
replace the globalisation/localisation juxtaposition since the terms are not necessarily
mutually exclusive (p. 32).
However, considering the two concepts separately may illuminate their compatibility
as an effective form of strategy for multi- or transnational businesses. Regarding brand
recognition, for example, globalisation facilitates easy information flow, e.g. to potential
investors overseas. This indicates that a brand does not necessarily have to actually be
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physically represented in a region or country and may still be more or less recognisable, at
least in business circles. Similarly, localisation is effective in adjusting a brand and its
products and services to a specific area. This is where franchising comes in as a rather
brilliant business strategies for multinational corporations. The company receives cash flows
in the form of inter alia franchising fees, royalties and sales percentages, while avoiding the
hassle of explicitly managing thousands of stores in tens of countries, all with different
cultures and norms for food and beverage consumption. Franchising to locals of a region or
country makes the transition and adaptation of e.g. menus easier. Locals are intimately
familiar with their areas and therefore the company does not need to conduct market research
to obtain the same knowledge. Considering the business strategy of franchising in relation to
glocalisation, it almost seems like the ideal method of expanding business into foreign
countries.
Colin Shaw, recognised author in the matter of customer experience, also emphasises
the need for making smart strategic considerations before using globalisation as a spring
board into international business ventures. He states that keeping a uniform, one-size-fits-all
approach will damage chances of success, especially when entering overseas markets (Shaw,
2014). Shaw exemplifies McDonald's as a success story, mentioning the international growth
of McDonald's in the 90s by offering kosher and halal meat products for respectively Jewish
and Islamic areas as well as the creation of a vegetarian Big Mac in India (Shaw, 2014).
Shaw (2014) also notes ironically that for a company widely known for standardised menu
items, it is very proficient in adapting to different cultures in order to improve sales.
The British McDonald's homepage (2012) has answered a question regarding the menu
differences in the world like this:
We try to adapt our menu to reflect different tastes and local traditions for every
country in which we have restaurants. We're keen to respect cultural differences and
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so every country has its own policy of developing menu items. You will still be able
to buy the most iconic items on our menu, such as our famous Big Mac, wherever you
are in the world, and every single one of our restaurants meets the same high quality
standards we take pride in ("Why is the McDonald's menu different in different
countries?").
Discussion
All of these companies have, as said, strong brands and are well-known across the
globe, this partially seems to be because they are American companies and therefore does not
have to face some of the same problems as other more local companies. The do on the other
hand have other problems they have to overcome like cultural adaption and religious
differences that they have never faced before.
When looking at the advertisement there are many things that could have been
analysed and compared but the topics chosen, mainly language were chosen because it were
relevant to look at when analysing these companies and their approaches to the local and
global market.
The product and services analysed were chosen to underline the differences and
similarities between the different countries restaurants. Other things that could have been
examined to see the differences were the restaurants themselves.
The fact that most of these successful companies use this same method and focuses on
the same things in their advertisement and products/services indicates that these methods
works and that this is a trend within the biggest fast food chains. Most of these terms and
strategies are, however, not only used by companies in the food industry, but in many other
The Big 10: Going Local?
48
industries as well. There are many examples in other industries that the leading company uses
a similar strategy and that other companies then uses that nearly same strategy, e.g. Coca
Cola and Pepsi Co. or Apple and Windows. There are these “battles” in almost every industry
and a tendency for there to be a clear number one too.
There are many different things to focus within this topic and many different
approaches that could have been taken. One of the things that could have been done
differently in this paper is to look at the leading companies in different industries and see
what they do and what they might have in common when discussing marketing strategies.
Another approach could have been to focus more on the mechanics inside the organisation
and look more detailed at how some of these companies are structured.
Conclusion
As seen in the examples in the analysis, there are differences in most of the menus from the
different chains, the chain with the least differences is, as expected, Starbucks. This suggests
that it is not only McDonald’s that have changed to a more glocal point of view since the
1990’s, but also other companies in this industry, however it is not possible to say if
McDonald’s were one of the first to change the ways they did things or if it more than one
company changed at the same time. When looking at the advertisement instead of the
products the lines become more blurry and it is difficult to draw a final conclusion. Many of
the companies have a lot of points in common, both in their marketing strategies and their
organisational structure on almost all points, the one company sticking out is Starbucks and
as number 5 on the list they prove that it is possible to be a major multinational American
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company without following the model of McDonald’s. It can of course be said that it is easier
to a company mainly selling coffee and other beverages to keep the menu uniform and not
having to changes the content because of religion or cultural differences. However it also
says something about Starbucks as a company that they only have one website and only one
menu, they are not embracing the local on that point and therefore the term glocalisation does
not really apply them either.
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YUM! (2013). YUM! News. Retrieved May 26, 2014 from
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Appendix Sources:
DDB Stockholm, Sweden (n.d.). McDonald’s: Festival. Retrieved May 26, 2014 from
http://adsoftheworld.com/media/outdoor/mcdonalds_festival
Dim Propaganda, Brazil (n.d.). Pizza Hut: Supreme Pepper Tabasco Pizza. Retrieved May
16, 2014, from
http://adsoftheworld.com/media/ambient/pizza_hut_supreme_pepper_tabasco_pizza
DraftFCB, Bangkok Thailand (n.d.) Pizza Hut: Telephone. Retrieved May 26, 2014 from
http://adsoftheworld.com/media/print/pizza_hut_telephone
Iris, London, UK (n.d.) Domino’s Pizza: Street. Retrieved May 26, 2014 from
http://adsoftheworld.com/media/print/dominos_pizza_street
JWT, Barcelona, Spain (n.d.) Dunkin Donuts Coffee Shop: Mortgage. Retrieved May 26,
2014 from
http://adsoftheworld.com/media/print/dunkin_donuts_coffee_shop_mortgage
Rái, São Paulo Brazil (n.d.). Starbucks: Coffee Braille. Retrieved from
http://adsoftheworld.com/media/ambient/starbucks_coffee_braille
The Big 10: Going Local?
Shout, Gothenburg, Sweden (2013) Burger King: The Day After. Retrieved May 26, 2014
from http://adsoftheworld.com/media/print/burger_king_the_day_after
TBWA/Paris France (n.d.). McDonald’s: Big Mac. Retrieved on
http://adsoftheworld.com/media/outdoor/mcdonalds_big_mac
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