Can McDonald's model innovation improve the disadvantages in China?

McDonald's, ranked first in the restaurant industry in the world, has had poor performance in the Chinese market over the years. Whether it is the number of stores or the degree of localization of products, the world's oldest boss has always fallen behind the world's seventh-ranked KFC. By the end of 2005, Yum! Group had opened more than 1600 restaurants in China (including 170 Pizza Huts). McDonald's has only 735 restaurants so far; Yum! Group's profit margin in China is 19%, and McDonald's profit margin in China is only 10%. -11%; KFC's opening speed is more than three times the average of McDonald's 100 each year. The embarrassing market performance made the U.S. headquarters quite dissatisfied. In order to save face at home and change its position in the Chinese market for many years, McDonald's executives including global CEO Jim Skinner decided to extend the strategy. Code pressure in the new model - "get fast" rapid expansion, with a view to revive the world's first fast-food empire, and thus compete with old rival KFC in the speed of opening a shop on time.

"The McDonald's has been coming" is a special name for the McDonald's Car Restaurant. It is expressed in English as "Drive-Thru". It is a brand-new fast food service model. Since the establishment of the first "McDonald's Drive" since 1975, it has been nearly 30 years old. The so-called “drive-through” business model allows consumers to complete the entire shopping process on the car through three windows: “The consumer drives a car at the first window, pays for the money in two windows, and then in the third window. Take things and then drive away; its new service idea is to pass “McDonald’s real fast food feelings” to new customers, so that they can enjoy McDonald’s unique taste and service without getting off the train. It's time-saving. All restaurants have a maximum residence time of 3 minutes from entering the car.

With this new model, McDonald's has made rapid progress in Asia and currently has opened more than 1,000 in Japan and China. In the U.S. market, McDonald’s “goes through” 50%-60% of its total number of stores, and over 60% of the revenue of the fast food industry comes from “car restaurants”. Since KFC opened its first "car shuttle restaurant" in Beijing in 2002, McDonald's has opened three car restaurants in Dongguan, Shanghai and Guangzhou in recent months, and has been refueling in major cities such as Chengdu, Zhengzhou and Shenyang. Stations, intercity highways, entrances and exits, service areas and other areas where cars frequently travel and traffic conditions have become the target of the competition between the two giants.

So, does McDonald's betting "get off the ground", does it change his fate and weakness in the Chinese market? Can the “car dining room” business model develop as fast as it did in the home country of the United States? We may carefully analyze from the following aspects: market development potential, investment income, cooperation and expansion model, domestic social environment, and its own management factors:

I. Market potential of "car restaurants"

1, the number of car owners

The first explanation here is that the new “automobile restaurant” consumer population is basically a car crowd, and it is mainly represented by private cars. They constitute a heavy consumer group that “gets to speed”. According to the statistics of the China Association of Automobile Manufacturers, the number of private cars in China was 6 million at the end of 2004. In 2005, the number of cars sold was 2.65 million, which was deducted from exports, damages and other factors. It is estimated that the effective use of private cars in China is about 7 million cars. , Then we can estimate the effective use of private cars in some big cities such as Beijing, Shanghai, and Guangdong, which are ready to open in the near future. The effective use of private cars will be limited to about 3 to 4 million vehicles. This group of people and family members will increase in the future. The mass population will constitute the core consumer group of “McDonald's has come fast” in the next 3-5 years, and our analysis will also focus on this group of people.

2, consumer behavior habits

Compared with McDonald's ordinary fast food, the “get-through” target consumer groups have narrowed significantly. At the same time, their consumption habits are also different from ordinary Americans. How much do they agree with the foreign culture of hamburger fast food and continue to consume? I think McDonald's High-level officials can only gradually explore and estimate through trials. You can't expect them to pack on American courses when they are traveling with family, gather friends, visit friends and relatives, or expect the average taxi master to sip chicken wings when they are hungry. Cola, the only outstanding advantage of “receiving speed” is that the service is fast and not blind, but how many people drive a car to experience this kind of quick service, and more just pass by and coincide with eating. Take the initiative. In addition, due to factors such as time interval setting, service specification and rhythm, inadequate training, and mental status of the vehicle occupants, the disharmonious events between the two parties will also pose new challenges to the service model. Previously, KFC had a fierce quarrel between customers and shop assistants in Beijing’s auto restaurants, which led to congestion in the shopping lane. This made KFC more cautious in site selection. After all, this contradiction was more difficult to control than ordinary fast food restaurants. many.

In terms of the structure of the crowd, most of these private car owners are economically affluent middle and high-level business people, small bosses, public servants, and well-fledged urban white-collar workers. They are generally aged over 30, and consumerism is not blinded by the popularity. Compared with the diet, although the concept of time is strong, but they are generally able to control their own time, most of them are just to take a family out on the weekend to relax and enjoy life. On the other hand, we can find that the target population of ordinary fast food is mainly composed of three types of people: urban young boys and girls, especially students, urban families with children, and some street leisure people with limited time and money. There is a huge contrast between the two groups of people, which has led to some ambiguities in the target consumption orientation, product development, and propaganda appeal.

3, competitive threat from Yum!

Old rivals will also create more and more troubles while participating in competitions. The direct costs resulting from the lot price increase, the diversion from the target consumer groups, the harassment from propaganda, and the turnaround from KFC’s several brothers... .... KFC is the first person to eat crabs in the development of new channels of “car restaurants”. At present, the two are comparable in terms of selection, investment budget, and strategic decision-making. They all regard the new channel of “car restaurants” as a strategy for future business models. Inflection point, but judging from the current market development trend, the profit increase is still a cake hung in the air.

Second, the investment recovery period will be too long

According to the current two announced fast-food franchise fees, the average average restaurant in a metropolis is very impressive from the site selection to business hours and funds (an average investment of 8 million yuan, a 2-3 month preparatory period). The time and money that McDonald's has to take up will be several times or even more than that of ordinary restaurants. This large amount of investment will challenge the decision makers very much. The recovery of funds will be very cautious for decision makers and franchisees. There is a choice, and there are a large number of stores that need to be operating rather than the final buyout, so that the sharing of costs and expected returns will have an uncertain impact on cash flow.

Whether it is KFC or McDonald's, the reality that must be faced is that Chinese consumers are unfamiliar with the model of a car shuttle restaurant. In the two months since the opening of the KFC Shanghai Auto Shuttle Restaurant, the proportion of car consumption has only been 30%, and the cafeteria is still the main source of consumption.

Third, the channel operating mode itself

McDonald's pressed the weight of China's competitive strategy on the site selection and rapid growth of “get-through”. In order to achieve the established Chinese market development strategy, “go fast” focused on each expansion node, besides their On the question of lanes, more careful consideration was given. In the site selection, it is more inclined to express highways or areas where automobiles pass through, instead of the core business districts. At the same time, it is required that the selected target must have a certain level of consumer strength and level. As a pilot, its first car restaurant was not selected as a large-scale city in the first-tier cities like KFC. It was on the main road in Dongguan, Guangdong. For this reason, "come on the road" has chosen a variety of cooperative expansion models.

1, brand output mode:

McDonald's is currently cooperating with a number of auto gas stations for brand cooperation. The former issued branding, operation, and management standards, while the latter provided operating venues to enjoy the operating benefits of McDonald's “get-through” brand. This cooperation model The main purpose is to use the ideal platform for gas stations to rapidly expand "get in." The main reason for choosing a petrol station is because it is an important place frequented by target consumers. In addition to the existing infrastructure, such as access lanes and other ancillary facilities, its business development is much more convenient and the construction cost is generally lower than other. transportation hub. KFC is also secretly launching the introduction of the universal model of two foreign auto restaurants, including gas stations and highway toll stations, to China. In the long run, the results of the two companies’ defection will raise the price of gas stations and toll stations. The first benefit will be to them.

2. Cooperation mode of building development

In addition to the general transportation hub, McDonald's will try to cooperate with some powerful real estate developers, especially some mid to high-end residential and business districts. Since the shuttle shuttle restaurant must have independent access lanes, the existing property is under development and design. It did not take into account enough reserved lane positions. However, this strategy still remains at the scenario stage. In actual operation, we must fully take care of and balance the interests of all parties. We must further consider the opinions of the competent authorities such as the Ministry of Construction and the housing management agencies.

3, franchise model

The franchise model of KFC's ordinary fast-food restaurant expansion model will become an effective magic weapon for McDonald's “quick-leap” rapid expansion. At present, McDonald’s is also actively exploring, and its constant decrease in the initial fee for fast-food restaurants is an attempt. There will also be breakthroughs in terms of franchise regulations and division into strategies. At this stage, the franchise model is undoubtedly the most effective model for reducing capital risks and achieving rapid expansion.

4, service content model

According to the high-level disclosure, “Take the Express” will continue to use the service model that combines dine-in and shuttle-carrying restaurants, but in the future it will gradually reduce the proportion of reduced dining services. In addition to the considerations of eating in the dining room, “gets to speed” also makes full use of all the design elements that can bring popularity, such as a children’s play area, a family dinner area, a company lunch meeting area, and a free internet area. Narrower consumer groups have expanded to general corporate employees and residents. The innovation of service content is undoubtedly a positive one. However, the ensuing problems will also be presented. Generally, employees and residents of households will give up ordinary fast food restaurants that are more convenient for walking for a fast food, unless there is no McDonald's around. Or KFC ordinary fast food restaurants, otherwise the two will form a new competition, this is probably the reality that McDonald's would not like to see. In addition, the construction cost of “going fast” is much more than that of ordinary fast food shops.

5, site selection

Unlike U.S. society, McDonald's requirements for opening auto restaurants in China are more demanding on the external environment. China's road infrastructure is poor, income distribution is not balanced, and the actual national conditions with a low proportion of car owners determine the difficulty of selecting a car restaurant. Large, especially densely populated urban areas, also need to consider the smooth roads and traffic regulations and will not cause car congestion. In addition, the site size, traffic volume, surrounding major residents and their income level are all constraints.

In addition to this, there will be dissatisfaction with the idea of ​​transplanting American experience at the top level. In the United States, McDonald's is not only a fast food retailer, but also an out-of-the-way real estate agent. McDonald's owns 60% of the tens of thousands of stores owned by McDonald's. Through McDonald's restaurant technology and licensing, advertising effects, and venue rental, McDonald's maximizes its customers. Limitedly attracted to their real estate, 90% of their total revenue comes from rent. In China, most restaurants in McDonald's are rented places, and the huge rent risk will make the American real estate management concept unclear.

Fourth, China's macro environment

As a multinational giant who has tested water in the Chinese market for many years, it must fully consider the economic environment, politics, law, beliefs and other social environments in which the local market is located. In recent years, the awareness of consumption rights protection of the Chinese people has gradually increased, and laws and regulations gradually improved. Perfection, social and cultural concepts are constantly improving, and rational consumption cultivated in such an environment has gradually become the mainstream of society. These factors will more or less constrain or influence the development of the “quick-going” new fast food model. Yes, there is still a big difference between the concept of fast-food culture consumption of the Chinese people at the present stage and the concept of fast food culture consumption of the American public. This kind of ideological superstructure built on the domestic economy will be a long-term constraint for McDonald's. "LaoSai" brand's rapid expansion factor in China, and McDonald's first thing to do is to change itself to achieve survival of the fittest, and then map development, localization strategy is only one of them.

V. Self-management factors

McDonald's internal structure and personal arrangements are still subject to change. With the help of Jim Skinner’s right-hand man, Shi Lesheng, the company’s senior vice president, was appointed to the CEO of the Chinese region. The new official took office for three fires, which opened up a large number of high-level Chinese officials. The overture of the change: The first fire was reflected in the original global market senior director Gary Rosen, who was also sent to Shanghai as vice president and chief marketing officer in China. The second fire is to reorganize the market operation department from the original north and south regions to the four regions of the east, south, north, and middle, and reshuffle the heads of various departments, such as the former McDonald's Beijing General Manager Shi Wenzhe, North District. Lai Linsheng, the managing director of the company, has been resigned. In February of this year, former director of the South China District of McDonald's China, Mr. Situ Yaoming, took a new position. The third fire is the implementation of director-level positions have also changed the new blood, some managers from Hong Kong and Taiwan were replaced by lower-paid local employees. These people's changes are a bit of a surprise to grassroots personnel, which will bring uncertainties to McDonald's China over a period of time and will have more or less negative impact on the upcoming new business.

From the above perspectives, the brand-new business-to-business model has remained at the stage of exploration and ideal design. The newly established outlets in the country have only shown a prosperous market appearance because of the large proportion of school meals. As a new thing, it will surely show its own advantages and characteristics. It will surely cater to some new tasters, but how large is the proportion of the population? Will it continue to consume and eventually loyalty after the trial? How to increase long-lasting attraction while guiding consumer behavior? McDonald's China is facing systemic decision-making risks. In addition, it will continue to endure the pressure brought by the competitive disadvantage of KFC and continue to cultivate consumer sentiment with the domestic people. KFC's delay in the development of the car fast-food model is not only due to the problem of site selection and cooperation model, but also considers the market acceptance issue. After all, it is still necessary to rely on special groups of currency voting to determine the results, and the voting results are not It will soon be revealed that McDonald's and KFC leaders who wait to see this result must maintain enough patience and demeanor during the trial.