McDonalds, the largest fast-food chain in the entire world, serves some 64 million customers at more than 29,000 stores in 119 countries daily. How is it even possible therefore that such an established brand could have failed in Jamaica?
McDonalds, perhaps as stunned as everyone else, said very little at the time of its withdrawal. They noted simply that their decision was strictly business.
“At the moment, we cannot continue to serve Jamaicans the way they deserve and expect,” was the statement from their representative.
Jamaican Popular Opinion
The main rationalization among Jamaicans was that McDonalds failed simply because its burgers were too small. Leighton Levy wrote in a column for the Jamaica Star:
McDonald’s…must take most of the blame for their failure here, because for a fast-food franchise that boasts of selling billions of hamburgers worldwide, they should have done more research on the Jamaican approach to food.
The first and most important thing they would have discovered is that no matter how many hamburgers you’ve sold, if it not big or ’nuff’ Jamaicans aren’t interested.
There is a reason why Burger King has managed to take root in Jamaica. Do you see the size of their hamburgers?
It is clear, however, that the real reason for McDonald’s departure had to do with more than tiny buns. This is clear from several facts:
- Just before closing, McDonald’s had massive expansion plans
In an April 2004 news article it was reported that Mrs. Patricia Issacs-Greene, then franchise holder, “was to spearhead an ambitious plan that would see the opening of 15 more restaurants throughout the island,” over five years. The plans however “had to be revised as the economy continued to contract and the local dollar continued to lose ground mainly against its United States counterpart.” [more]
- There was almost definitive word that Chris Issa was going to take over the franchise
The same April 2004 article highlighted that though several business leaders had expressed interest in owning the franchise the application of Christopher Issa seemed most likely to succeed. The article further noted that Mr. Issa was believed to have attended a McDonald’s owner/operator convention in Orlando, Florida.
So, Why did McDonald’s fail in Jamaica? It is clear from the facts stated that both McDonalds Corporation and a number of local investors saw the tremendous potential for the brand locally.
- Is it that McDonald’s was not pleased with the application of those who applied to take over the franchise?
- Have McDonald’s even identified the real reasons their stint in Jamaica was unsuccessful? [I’ll give you one suggestion – you guys had very little presence locally].
- When does McDonald’s plan to make its valiant and promised return?
Try Again – 2 Smashing to Resurrect the Brand!
I think McDonald’s has great potential to succeed in Jamaica and so the Corporation should evaluate its failure and try again.
Here are the two reasons why McDonalds should return to Jamaica:
1. McDonald’s is not associated with failure
In 2011 while companies were floundering and some, like Blockbuster even flat-lined, McDonalds was pressing forwarding with enviable speed, “leading all 30Dow Jones companies.” Anand Chokkavelu, reporting for The Motley Fool writes
Last year (2011), the Golden Arches had a banner year, leading all 30 Dow companies. As the Dow gained a modest 5.5% (before dividends), McDonald’s gained 30.7%.
Additionally she points out,
“After tanking earlier in the decade, McDonald’s stock has been on quite the run. It’s the ninth straight year McDonald’s stock has ended the year higher than it began. Think about that. After eight straight winning years that spanned a recession, McDonald’s stock popped 30%!” [Read more]
A company that survives and grows during a recession on one hand can’t simply allow itself to just roll over and die on the other.
2. Nothing Is Wrong With the Market
Burger King, McDonalds’ biggest competitor, has said that some of their best performing restaurants are located right here. Vice-Chairman of Restaurant Associates Limited, the franchise holders of Burger king in Jamaica has reportedly said that “Burger King’s Latin American and Caribbean operations are among the best-performing regions.”
Burger King, which has been able to survive and thrive even in depressing times, is not even half the size of the McDonalds Corporation. Burger King is the second-largest United States hamburger chain behind its far-larger rival McDonald’s Corp. According to Burger King’s 2010 annual report,
We are the world’s second largest fast food hamburger restaurant, or FFHR, chain as measured by the total number of restaurants and system-wide sales. As of June 30, 2010, we owned or franchised a total of 12,174 restaurants in 76 countries and U.S. territories, of which 1,387 restaurants were Company restaurants and 10,787 were owned by our franchisees. Of these restaurants, 7,258 or 60% were located in the United States and 4,916 or 40% were located in our international markets.
Burger King has 27 stores in Jamaica. As at 2010, McDonalds had 32,737 stores worldwide, 20,563 more than Burger King.
What do you think about McDonalds’ decision to exit the Jamaican market? Do you think they should return?
Editor’s Note: This is a guest post by Andrew Wildes (@AndrewWildes), with additional reporting by Stephen Wildes (Editor). Read more about Andrew at MaximizeMyLife.