A lot of people think they know why the quick service restaurant, left Jamaica in 2005, after a making a very successful entry, and subsequent expansion in the fast food sector of this Caribbean island. Yes, we hear of the itty bitty aka small burgers, however others still question why the highly successful and global Mickey D’s brand would fail in Jamaica?
Believe it or not, we have received hundreds, yes hundreds of visits and queries since our first post a year ago (about 2 smashing reasons to resurrect McDonalds in Jamaica), and it continues to be a popular topic for people all over the world.
As a result we are doing more research. We have a more comprehensive article coming, however in the meantime, read what the U.S. Embassy in Kingston Jamaica released about the failure of the global brand.
The release goes;
SUBJECT: BIG MACS NO MORE: MCDONALD’S CEASES OPERATIONS IN JAMAICA
¶1. (U) Friday, October 14, effective 8p.m. local time, all McDonald’s outlets remaining in Jamaica closed their doors. In a September 29 letter sent to Charge, the President of McDonald’s Caribbean Division Jose Hernandez stated that the company’s “intent is to continue the search for a qualified local franchisee.” The Jamaican locations have been operated by the parent company since 2003, when Patricia Issacs-Green sold her franchises back to the company. Despite rumors that the company never gained the market share that they hoped for, it appears that the strict licensing requirements of the company were the primary reason.
Our summary: All locations closed. Yes market share is an issue but more important the strict licensing requirements seem to be the real hamper.
¶2. (U) McDonald’s had been operating in Jamaica since 1995. At its height, there were 11 stores around the island. This initial aggressive push, when few other U.S. “Quick-Service Restaurants” (QSRs) existed, proved too optimistic, and the local franchisee, Issacs-Green, scaled back to eight outlets. In 2003, however, she decided to sell her stores back to her corporate parent, ostensibly to “spend more time with her family and pursue other interests.” McDonald’s sent Steve Blackwood to Jamaica to run the operation while seeking a suitable franchisee to take over.
¶3. (U) McDonald’s franchising requirements, however, are significant. In addition to the service fees, marketing fees and monthly rents that are industry standards, McDonald’s also requires that the franchisee spend nine unpaid months learning all aspects of their corporate culture, and must commit to making the restaurant(s) their only business interest. In the opinion of local entrepreneurs, it was this requirement that made searching for a successor to Issacs-Green virtually impossible. Becky Stockhausen, the Director of the American Chamber of Commerce and a longtime resident of Jamaica, told Econoff on October 13: “Jamaican [businesspeople] would simply never sign off on a commitment to one interest over the long term.” Jamaican investors, she said, own and operate many different businesses, and the concept of putting all of one’s time into a single project would simply not appeal to the business culture here.
Our Summary: Too much fees, franchising requirements, and bureaucracy made it unattractive to local businesspeople
¶4. (U) Marielena Santana, corporate spokeswoman from McDonald’s Puerto Rico-based Caribbean Division, also emphasized the corporate atmosphere as the reason why the company had difficulty finding a franchisee, and stated that in smaller international markets like Jamaica, the company does not typically direct operations. She noted, however, that Blackwood will remain in Kingston for several months, in order to assist the approximately 250 employees who will have to transition to new employment, and to ensure that the company meets all its financial and legal responsibilities. She said that the company hopes to find a suitable Jamaican franchisee in the future, but Stockhausen and others stated that they felt that it will be virtually impossible for the company to regain even the minimal foothold that it had here once they leave.
¶5. (U) Comment (also in the release): This is not the first Caribbean island to lose McDonald’s, despite the subsequent presence and success of other QSRs like Burger King and Kentucky Fried Chicken. Stockhausen noted that Barbados and Trinidad and Tobago have seen the company come and go while others survive. While this might seem to suggest an Achilles Heel in their globally successful armor, indications are that it is not the product, but rather the corporate demands that have led to this result. If they intend to return and prosper in Jamaica, it would appear that some flexibility may be required. End comment.
Understand it? Don’t? Don’t worry. We’re going to explain everything in our next post as to why McDonald’s left Jamaica.