The McDonald’s franchise’s West Gosford flagship store

After three years of planning, design and construction, the McDonald’s franchise has opened its first concept store in West Gosford, New South Wales. The restaurant is heralded as a possible prototype for future restaurants. Largely a franchisee-led initiative, this $3 million building revamp and research and development exercise is set to catapult the fast food icon into an era of ‘contemporisation’.

Gone are the plastic tables and chairs, fluorescent lighting, red and orange interiors and that distinct ‘McDonald’s’ smell wafting from the kitchens we have come to recognise. In comes a trendy eatery with stainless steel finishes, American cedar exterior walls, frameless glass entrance, soft lighting and mood music which changes with the time of day, hanging plasma TV screens, a McCafé with its own marble-top breakfast bar, a modern kitchen set up to serve ‘made to order meals’, a separate eating zone where mums can sip their lattes and watch their kids play through the transparent walls of Playland, which is now inside, not out, and a private dinning room for business people to connect their laptops to the wireless network and conduct business lunches.

This new ‘look’ and ‘feel’ is part of the broader strategy of change that has been taking place at McDonald’s over the last couple of years. On a journey of rediscovery, McDonald’s is actually consulting with nutritionists before launching new menus. Reduced fat meals have been added to the deli choice range and the signature fries are fried in cholesterol-free canola oil. Mascot Ronald McDonald is riding bikes and kicking balls, educating kids to get active while he talks to customers on the streets about the new menu choice. Not one detail has been overlooked in the quest to shed the old ‘Maccas’ hamburger joint image to a ‘McDonald’s of the future’ where everyone, from kids, mums to young professionals, want to not just eat, but spend time.

Appointed to the role of CEO in June this year, Peter Bush is excited by the challenge of continuing the McDonald’s path to change. Yet keeping up the pace of change will be his biggest test.

“We’ve created quite a bit of momentum in the business in terms of sales growth; expectation about the good things McDonald’s has been doing with the brand and the community and providing choice,” he says.

Bush concedes that ultimately the most compelling challenge is changing people’s attitudes towards the brand.

“Our mission is very clear. We want to become unequivocally Australia’s favourite brand. We’ve got a long, long way to go. We just need to keep doing the kinds of things that we’ve been doing in terms of offering food choices and becoming an increasingly big part of local communities through our support, whether that’s through Ronald McDonald House or sponsoring the local sporting teams and supporting the local schools. Our franchisees are, in particular, very good at that.”

Four years ago McDonald’s came up with a blueprint for the business which outlined a three year ‘image update’ plan. Significantly, the plan was set well before Morgan Spurlock’s film, Super Size Me was released.

“We identified four years ago that we really needed to contemporise our restaurants as the first thing we did,” Bush says. “A big part of that contemporatisation was the improvement of the McCafé. Four years ago only 70 restaurants had McCafés. We have found that a McCafé in country areas is regarded as the best coffee shop in town. And we are on an aggressive rollout program which should see 310 (of 731 restaurants) fitted out with McCafés by the end of the year.”

Although the West Gosford restaurant is the first prototype to launch it is not the future of all new restaurants. Bush says it represents the best of McDonald’s contemporary thinking. By 2009 they will evolve again and move on.

“We would like all our restaurants to look like this [West Gosford] encapsulating similar materials, the personality and ambiance of this kind of building,” he says.

Bush is referring to the slick cedar timber finishes, tiles, stonework, stainless steel and glass. To help create the ambiance, piped music through the building has become a major feature. According to John Eassy, NSW and ACT construction manager, McDonald’s has even appointed its own music director to compile music for each time of the day. Easy listening during the day for the mums to up-tempo McCafé del Mar-like beats for the evening crowd.

A lot of R&D has gone into the building as well as a review of the kitchen and its energy and production efficiency. No expense has been spared. An eco-friendly air conditioning unit has been installed which channels waste heat to the watering system to heat the water for the whole building.

Another change is that all the food is now ‘made to order’. To date, approximately 80 restaurants have been converted into ‘Made for You’ restaurants. This means the food is made for you once you’ve ordered it.

“We are now on an aggressive program rolling out kitchens that deliver this. The food is fresher,” Bush explains.

“Making an above market size improvement like this gives us an opportunity to grow. Even our floor managers prefer to work in this environment – and why wouldn’t they?”

‘Zoning’ has become another significant feature of the new format.

“We’ve tried to create different areas within the restaurant quite deliberately so there’s an area where teenagers feel happy and even business people,” Bush notes.

In one corner mums sit on a long table sipping a latte with one eye on the overhanging plasma TV and another eye on their kids playing in Playland. In another a businessman spreads out his newspaper on the large square faux marble McCafé breakfast bar, eats his Deli Choice roll and every now and then glances up at the plasma across the room.

“It all comes down to attitude,” says Eassy, “People have different wants and needs and we’ve arrived to the attitude that if you’re comfortable in your ambience and surroundings then you’re comfortable with the food you’re eating.”

Above the counter a new tri-menu board has been introduced which is rotated by hand and shows three different menus depending on the time of day. Between 6am and 10.30am the breakfast menu is up, then from 10.30am to close is the regular menu, and the third will be the forthcoming dinner menu which will be introduced next year.

“Customers want flexibility and that’s the heart of our design. Initially nobody thought the coffee high bench would work, but now we see that’s the first place customers flock to. They feel comfortable – more at home,” Bush says.

“Sometimes you need to take off the blinkers – what we call the McDonald’s wings.”

By the end of this year 200 restaurants will incorporate the new look. Bush says many will look like West Gosford and McDonald’s expects over the next five years to build about 12 new restaurants per annum.

“We’re not trying to make a big loud statement, just to say hey, McDonald’s has not only changed but it is making a very conscious effort to be part of today’s community, be contemporary and be a place where you like to eat and spend some time.”

Since the introduction of the new menus, Deli Choice and Salads Plus, there is the impression that the food is better and certainly what Bush is finding is that customers are saying that McDonald’s has improved and that the expectation of the food quality is superior to what it was.

Mark Rodgers, a licensee for Ararat and Horsham in Victoria, has made a million dollar investment to modify his two restaurants to incorporate the new look.

“The new concepts are great. Parts will prove to be successful and parts we’ll choose to modify. From our perspective being contemporary is the way we see the business heading,” he says. “Customers told us we needed to bring our restaurants up to something representative of 2005.”

On 1 December, Rodgers’ revamped Ararat restaurant will open with a McCafé, new décor and a plasma screen.

“Since we refurbished Horsham customers have been gob-smacked. People would walk in and stop short at the entrance, forcing the sliding doors to stay open.”

Rodgers has seen a 25 percent increase in patronage since he brought in the new designs. The new menus have also attracted customers who choose to eat only off the McCafé range and even the deli choice.

“When we introduced Salads Plus more mothers came in. We also have ‘McCafé mothers’ who have a coffee and croissant while their kids play in Playland.”

Before making the investment, Rodgers spoke to his customers and when asked they immediately wanted different style seating, somewhere where they could sit down as a group or by themselves in an area that was comfortable to be in.

“We’ve also moved away from the bright lighting and harsh surfaces and created a more inviting environment,” Rodgers says.

Pleasantly surprised, he says that no matter how bad the place looked during construction, the regulars kept coming back.

Approximately 70 percent of McDonald’s are franchisee-owned and operated, yet not a lot have seen the new concept store, says Bush. However, if you look over the course of the last three to four years the change has been by and large led by franchisees.

“This is for two reasons: it provides an opportunity to increase their business and part of this process is to put in a McCafé,” he says.

A blueprint is provided to help support franchisees in the quest to change consumer attitudes towards the chain.

“What gives franchisees the confidence to invest capital is a positive feel about what’s going on and how it will add to their business and the brand generally. For this they need to see a long-term plan,” Bush says.

“I have to say that over the last five years, as and when we use the blueprint, we’ve had a substantial level of support from the franchisee community.”

As the ‘fast food company of the world’ the obesity issue has hit the core for many, yet McDonald’s has always stood by its responsibility to do the right thing by customers and give them what they want.

“It’s no harder or easier then that,” Bush says.

“All the things we’ve done in our restaurants and our business plan is in response to what our customers are saying. If you think about the obesity debate our customers are saying in response to that they like to have variety – I’d like to have a salad, I’d like to have something with less fat and less sugar in it. Our response to them is very much about providing that choice.

“We’ve also done other things with regards to the obesity issue which we think are reflective of our leadership stance in the marketplace. We will continue to do this by engaging a team of nutritionists from The Food Group to help us develop our menus. Over the past three years we have been meeting regularly with several hundred nutritionists around Australia, GPs and important community leaders, such as politicians in open forums, talking about our plans and our changes, but more importantly hearing back from them what they think McDonald’s should be doing.” If you haven’t noticed, McDonald is capturing that feeling of change through its latest advertising campaign, which centres on finding that ‘inner child’.

Director of marketing Dion Workman, says: “The campaign is an opportunity for us to remind customers we have changed and that we are only at the beginning of our journey and we are committed to giving them more choices.”

Response to the advertising has personally taken Bush by surprise.

“I’ve been overwhelmed by the feedback. The rationale behind the ad was to get people to take another look at McDonald’s. It really has struck a chord,” he says.

“While there certainly has been a very positive response that normally translates into sales, I think the other thing that’s happening in the marketplace is the very substantial fuel price increases. We certainly have a history in the business of seeing a correlation between people coming in due to mortgage rates and fuel prices, so we can anticipate that the very positive response from the advertising will soon translate into sales.”

Since the launch of the new concept stores and menus, McDonald’s has seen a change in the profile of people coming into the restaurants.

Bush explains by giving his favourite example: “Five years ago somebody in a car says, ‘There is nothing I want to eat at McDonald’s today, you guys go eat a burger and fries and I’ll go eat somewhere else’. What happens today is that everybody in that car will come into the restaurant because I can get a salad, you can get a burger, you a deli roll and you an espresso coffee.”

So what do we have to look forward to next from McDonald’s? A new line of health-conscious Happy Meals for kids which will be given the stamp of approval by nutritionists, teachers, children’s caterers and mums, along with pastas, rice dishes and Asian stir fries for those curious to rediscover the ‘inner child’ within.

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