McDonald’s opened its first outlet in South Africa in 1995. Today the company has 153 restaurants throughout the country. How made it in Africa talks to the managing director of McDonald’s South Africa, Greg Solomon.
How would you describe the current state of the South African economy?
There has been a slowing down of the economy over the last six months. I would say that the recession has been delayed in South Africa because of the World Cup. We might be feeling a tightening up. 2011 is not as strong as 2010 at all. The McDonald’s business is, however, in a very strong position. We are coming off the back of three years of absolutely fantastic momentum. We are excited about the future.
South African businessman Cyril Ramaphosa recently took control of McDonald’s South Africa; what are your future plans for the company?
This transaction is a transaction of growth. It is a transaction of acceleration as well. What more could you ask for in a partnership? You have one of the world’s best brands and one of South Africa’s most inspirational leaders coming together to give a truly ‘glocal’ flavour to this business. We want to double the business in the next four to five years.
What are the greatest challenges facing the business?
I certainly don’t think that there is anything that is insurmountable. But in our business, it is always going to be about commodities. We serve food, so we are keeping an eye on the food price increases. We are carefully watching our input costs, such as the price of beef, the price of transportation, the infrastructure and utility costs. That would be one of my biggest concerns as a possible threat to the profitability of the business.
Other than that, when you are doubling up the business, you are doubling up the people. We currently employ just over 7,500 employees, which would take our employee base to 15,000 people. We need to keep our eye on the ball to make sure that we are growing talent in McDonald’s, to make sure that we continue to offer the great service that we promise to give.
Do you have the freedom to adjust your menu according to local tastes?
We have freedom within a framework. The reason why McDonald’s is so successful all over the world is that it has untouchable brands that you cannot change, such as the world famous Big Mac. I would say that 50% of the McDonald’s brand worldwide is consistent and the same. That is why consumers really love our businesses, because if you go to Europe or Japan or South Africa, you can get the same consistency. Each country has the flexibility or the freedom within the framework to make some locally relevant changes. We’ve done that in South Africa. We’ve introduced a product called the Grilled Chicken Foldover, which is our number one selling chicken product. On the beef burger side we’ve got a product called the McFeast, which has a South African taste and flavour as well. So we have locally adapted our business model to meet South African consumers’ needs.
Are you planning to expand into the rest of the continent?
We’ve got our work cut out for us in the South African market. Right now, Cyril, myself and the rest of the management team are very focused on South Africa where we see a lot of opportunity. We want to take care of the South African consumers first.