A Big Mac, fries, and a Coke – how iconic is that image? It’s one that conjures up memories of eating out with your family, getting that Happy Meal Toy you’ve been waiting for, or midnight burger runs. Let’s face it, McDonald’s is the face of the fast food burger not only in South Africa but the world over.
Last year, Next Window Plz was invited on a kitchen tour of the McDonald’s branch in the V&A Waterfront, Cape Town. We had the opportunity to pick the brain of the company’s Chief Operations and Supply Chain Officer, Jo Ann de Wet.
Since 1995, McDonald’s has grown into a powerhouse in the SA food market. To date, there are well over 300 branches all over the country. You’ll be hard-pressed to find anyone that doesn’t know of the golden arches and their signature burgers.
As we found out, there was more to the franchise than meets the eye.
Contingency plans for ingredients
The Western Cape is in the midst of a severe drought. Even though the date has been pushed back several times, there are constant questions about #DayZero and what it means for those living in the province. One company, however, has managed to think ahead of the drought.
Ever wondered how McDonald’s always has stock of produce and other ingredients, even though a crisis? Well, it builds contingency plans into all of its agreements with suppliers.
“[…]even with the drought, based on our procurement criteria, we build in what we [McDonald’s] refers to as a ‘contingency relationship’ with that supplier,” says de Wet.
Suppliers for McDonald’s need to brokerage partnerships with other suppliers and manufacturers (international, opposition or otherwise) in order to ensure that the fast food chain has an uninterrupted supply of ingredients for its offerings.
These agreements don’t just include methods for acquiring products, but also strict health regulations.
Strict health conditions
McDonald’s re-evaluates supplier agreements every ten to fifteen years, and [at the time of the vent] is currently approaching that threshold. When looking at new suppliers, the company conducts strict tests with the supplier. These consist of agreeing upon specific feedlots and testing any bodies of water close to the cattle for contaminants. If there is a risk of nearby contamination, McDonald’s can turn down the supplier.
How do you “own” a McDonald’s location?
There’s a running joke that McDonald’s locations just spring up overnight. One day there’s an empty lot and the next it’s a fully fleshed out fast food joint. In reality, these locations take months of planning, not just with the building but the franchisees as well.
“It’s probably not the easiest thing to become a franchisee at McDonald’s, because the first thing we ask for is your sweat equity.
“When you become a franchisee at McDonald’s, the equipment, seating, signage, and decor is what you own. The land belongs to us [McDonald’s] except in a [V&A] Waterfront scenario; we would have the head lease with the landlord in this location, for example, and sub-let it to a franchise.”
In general, McDonald’s will not only identify prime locations for new establishments but the right time to set up shop. Only when a franchisee has earned the trust of the fast food chain – such as owning several outlets – will McDonald’s listen to them with regards to identifying suitable locations.
In order to start transacting, you will require a minimum of 35% unencumbered cash, from a commercial perspective, for the seating etc. McDonald’s also wants the franchisee to be in a position to pay off their loan to the company within four and a half to five and a half years.
“You do nine months operational training; not paid for at all as a way to understand how badly you want it.
“We look for owners that are operators. We don’t look for franchisees, because, otherwise, we’ll just have equity partners investing in a model and somebody else will be responsible for that brand.”
Though this may seem like large hoops to put potential store operators though, it’s the company’s way or gauging how badly a potential franchisee wants to operate a location. Just because you go through the nine months of training doesn’t guarantee that McDonald’s will accept you at the end.
“It’s a very difficult journey. Not everybody is prepared to stop whatever they’re doing and to learn how to run this restaurant for nine months,” adds De Wet.
How does McDonald’s US influence SA operations?
“The US drives elements of governance, but it forms part of our franchise agreement with the US.”
The US is strict on the overall image of the brand in order to protect it. This, in particular, can be seen in the McDonald’s menu. According to De Wet, there are core items that every single branch of the company has to offer, such as the iconic Big Mac, french fries, and the Filet-o-Fish [read our review here]. The rest of the menu is flexible.
The overnight staff
Several years ago, McDonald’s SA operated on standard operating hours. During the week, branches would close at 11pm, while weekends would continue on until midnight. During the course of a convention in the US, there was a large discussion around operating branches 24/7.
McDonald’s SA didn’t think it would work in the country but decided to speak to staff to gauge their thoughts. According to De Wet, staff members were fine with working these extended hours; the primary concern was safety.
Research into security and risk assessment was conducted with the help of the South African Police Services. The findings from the exercise included more measures, such as burglar bars in key areas.
Any staff member working overnight will qualify for an additional allowance each hour. This is referred to as an “overnight allowance” and not overtime.
“Some parents want to work the overnight and be at home, especially over a weekend and they want more flexibility in work,” she says.
Read more: Big King burger from Burger King [Review]
Every so often, head honchos from different regions will test food from other areas. This helps to figure out exactly what new product to introduce and predict upcoming trends. Though, this doesn’t mean we’ll see curly fries with sour cream dip anytime soon.
In fact, the SA market dictates what products we have in the long room. When asked to elaborate, De Wet said: “South Africans love spicy.”