Generational Change

According to this week’s Wall Street Journal, even the world’s largest hamburger chain recognizes that the generation in charge of its restaurants is changing, and thus that it needs to adapt in order to continue to thrive.

McDonald’s Corp. may seem like a just another giant corporation, but its secret sauce has always been its small-business franchisees—and now that network is undergoing one of its biggest generational transformations in decades as the children of owners start taking over from their parents.

How are the next generation of owners changing McDonalds?

  • The younger franchisees are proposing everything from healthier foods—including gluten-free hamburger buns and organic produce—to more corporate responsibility on issues like recycling and providing community services like books for low-income kids…
  • Among their changes: a line of upscale burgers with thicker patties called Angus burgers that have contributed to sales growth; free Wi-Fi, which has helped keep McDonald’s competitive with Starbucks Corp.; a picture-based ordering system that shaves precious seconds from customer wait times; and payment by credit card, which boosted the value of transactions since people tend to order more when they charge it.
  • Another seemingly simple idea, Mr. Johannesen <McDonald’s USA chief operating officer> said, was to keep McDonald’s open later into the evening, which has helped the company wring more sales out of existing restaurants. Today, nearly 40% of its U.S. outlets are open around the clock, up from about 30% seven years ago. “Our young people helped us understand that there’s a lot more going on when the rest of us are sleeping than we would have known,” Mr. Johannesen says.

As with any corporate change,  the new generation of franchisees need to make an appropriate business case for the ideas they propose:

McDonald’s spokeswoman Danya Proud says new ideas need to be appropriate for all 14,000 restaurants in the U.S. “Not to say it couldn’t happen or that we’re not looking at things like gluten-free buns and organic produce,” Ms. Proud said. “But with a system the size of ours it has to be something that has an appeal to the masses.”…

Still, corporate managers emphasize that they are relying on the young franchisees for fresh ideas to sustain their multiyear growth tear.

What I also appreciated about this article was how the younger generation is addressing resistance to their brand, head-on:

Some younger franchisees are taking a different approach to criticism than their parents’ generation. For example, Brandon O’Rourke, a 39-year-old franchisee, decided to proactively approach what he calls the “haters,” or people who dislike McDonald’s.

Mr. O’Rourke, who until recently owned two McDonald’s in Denver and is now opening five in Phoenix, has visited McDonald’s citrus growers in Florida, chicken farmers in Arkansas, potato fields in Idaho and beef processing plants in Oklahoma. He says what he has seen has given him confidence in the quality of McDonald’s food and ammunition to fend off critics.

More than a year ago, he invited some mothers who were blogging about whether to let their kids eat fast food for a tour of a kitchen at one of his restaurants. Some of them had thought the eggs in the Egg McMuffin were cut from a giant log of processed egg and were surprised to see that McDonald’s actually cracks eggs in the restaurant, he says. The moms later blogged about what they saw.

Recently, he fielded questions from 7th and 8th graders at his daughter’s school after a teacher showed the documentary “Super Size Me.” One kid, he recalls, thought McDonald’s killed chickens by putting them in a blender. “I could answer all their questions because I had seen it for myself,” Mr. O’Rourke says.

As our workforce continues to change it is imperative that we as leaders are open to the suggestions coming from the next generation of employees. Who knows, they may surprise us with ideas for opportunities that we never would have realized are possible!

About Michelle Smeby

Michelle Smeby is CEO of wHolistic Change, Inc. with more than 10 years of experience implementing enterprise solutions at Fortune 100 companies. Michelle specializes in helping corporations deliver transformational change.

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