McDonald’s Middle East Development Company: Building Business Success with a Local Ingredient

October 12, 2013 in Food & Drink
    It used to be said that there were two certainties in life: death and taxes. Perhaps a third truth has emerged: that you can find a McDonald’s restaurant almost anywhere on the planet.

    McDonaldsThe growth of McDonald’s has been truly phenomenal, having started as a humble small barbeque restaurant in 1954 and growing into one of the most instantly recognisable brands in the world through its iconic “Golden Arches”.

    Today the company reports that it operates some 32,000 restaurants serving more than 60 million people in more than 100 countries every day.

    In July, McDonald’s Middle East and Africa Development Company announced an extension to its partnership with McDonald’s Saudi Arabia. A formal signing ceremony took place at the McDonald’s Middle East & Africa Developmental Licensee Summit in Cyprus.

    Abdulrahman Alireza, GM, Reza Food Services, and David Hoffman, president, McDonald’s Asia Pacific Middle East and Africa (APMEA), signed the deal.

    Alireza commented, “We are today celebrating a significant milestone, building on years and years of a successful business partnership and the investments we have made in our local community.

    We are extremely proud to be renewing and reinforcing our partnership with McDonald’s, and look forward to supporting the brand’s expansion and growth plans in Saudi Arabia and the wider region, as well increasing our commitment to our local economy, people, and community.”

    The McDonald’s Developmental Licensee Summit assembled senior executives from the Middle East & Africa with business owners and their respective senior marketing and operations teams from 16 countries.

    The developmental licensee model is a form of franchising that McDonald’s adopts in the Middle East – which sees restaurants 100 per cent owned and operated by the local business owners.

    APMEA is a very successful area for McDonald’s with over 9,500 restaurants, and the Middle East and Africa is an integral part of these operations,” said Yousif Abdulghani, managing director, McDonald’s Middle East and Africa.

    Later this year, we will be opening our 1,000th restaurant in the Middle East and Africa, and we are aiming to grow that figure to 1,400 restaurants by the end of 2015,” he continued

    The ownership model McDonald’s has adopted in the Middle East is a significant factor in the company’s success in the region. All business decisions are taken locally and income is reinvested in the local economy.

    In April, Abdulghani addressed the future of the franchise business model at the International Franchise Forum in Dubai. His speech underlined the focus McDonald’s has on creating jobs and driving nationalisation programmes across the region – which he recognized would be tough to accomplish – but may become a “game-changer” and the platform for future franchise success.

    With unemployment an acute reality in some areas of the EMEA region, he stressed that the fast-growing quick service restaurant sector offers a strong job platform that supports localization initiatives:  “A great example is Saudi Arabia, where we have over 1,000 Saudi nationals employed by McDonald’s. We have always been a strong believer in nurturing local talent. We believe it is critical that we create not just jobs, but careers; employment that fosters economic growth, builds industry skills and creates real opportunities at every level. Each market is actively involved in their local community with a great focus on nationalization.”

    Of equal importance, Abdulghani highlighted the role of location for each restaurant: “The cost of real estate and location of restaurants are critical factors in the success of the business. While the proliferation of shopping malls has played an instrumental role in the growth of quick service restaurants in the region, it is important to have a balance between standalone restaurants and outlets within mall food courts to take the brand experience to a wider cross-section of customers. You cannot build the brand equity of a restaurant just by being in the food court. Standalone restaurants will continue to offer exciting opportunities for franchisors,” he affirmed.

    McDonald’s has embarked on a sustainable supply chain programme aimed at delivering profitability, maintaining food security and quality – and importantly ensuring reliability – which is of course crucial for a business using fresh ingredients. The company says that its vision is to create a supply chain that yields a net benefit “by improving ethical, environmental and economic outcomes. We view this vision and our responsibilities holistically. As sourcing decisions are made, we consider our priorities for food safety, quality and costs, as well as our ethical, environmental and economic responsibilities. Our global progress on beef and coffee sustainability illustrate how we are working to bring this approach to life.”

    Abdulghani emphasized the imperative for creating and maintaining a robust supply chain during his Dubai address: “It is important to secure the best products at the best prices. This can be one of the biggest challenges for a franchisor. To facilitate this process, McDonald’s leverages its global network and purchasing power to ensure we deliver the best quality at the best price to our customers. Ongoing changes in food safety regulations and distribution present additional challenges in this part of the world, which is where contingency planning is vital,” he outlined.

    In March, the company affirmed its commitment to the region by serving more than 200,000 free Egg McMuffin breakfasts – a signature breakfast serving at McDonald’s. The gesture took place in 11 Middle Eastern Markets to celebrate National Breakfast Day, involving 325 restaurants across the region.

    Such initiatives help to build brand awareness of course and the company has enjoyed a successful journey since it first entered the UAE market in 1994.

    As far as Abdulghani is concerned, the proud history is the platform for an exciting future: “The success of the industry is ultimately the success of McDonald’s. We are honoured to have played such a vital role in creating business success, furthering economic growth and development; and creating employment opportunities in one of the most exciting and innovative industry models in one of the most interesting and dynamic regions of the world.”