Canadian CEO of McDonald’s Japan on the chain’s turnaround to growth
It’s been nearly nine years since I started working at McDonald’s in Japan. In fact, this is my second stint. Initially, starting in 2004, I spent five years learning the local market and focusing on various initiatives to drive business turnaround and growth. Then I moved to Malaysia, as managing director of McDonald’s there and, in 2013, I was appointed president and CEO, representative director of McDonald’s Company (Japan), Ltd.
While business in Japan at the time was on a downward trajectory, we were confronted with two very public product-quality issues. Customer loyalty and staff morale were heavily impacted as a result. By 2015, sales were down nearly one-third from the peak in 2010, and we recorded a ¥25 billion loss.
I knew that an ambitious, back-to-basics strategy was necessary and subsequently launched an 18-month business revitalization plan to get us on the right foot. There were really two main success factors that contributed to our remarkable turnaround: returning our focus to the customer, and getting the field staff fully behind the effort.
I visited all 47 prefectures and spoke directly with customers, staff and business partners to hear what they thought had gone wrong. We had suffered an erosion of trust in our brand, so we focused first on aligning marketing, supply chain and operations to regain trust.
Customers said they wanted to have back the original McDonald’s — a fun place for great value that served delicious burgers. We introduced several customer-focused initiatives, such as food safety and quality, menu and value enhancements, refocused on cleanliness and hospitality, and engaged our customers.
The field staff said we were not engaged and there were too many distant directives, so we immediately set out to empower the field staff, drive teamwork and introduce collectivist values in our internal communications and actions.
We cater to Japanese tastes with ginger pork burgers, teriyaki burgers and have added local fruit flavours to our desserts and shakes.
Fortunately, as a result of all the hard work and a return to basics, our numbers for the 2016 financial year returned to the black. Now, focused on moving from turnaround to growth, we are further enhancing our menu and value efforts, while modernizing the restaurant experience and brand engagement. We are investing in innovating around tastiness, convenience and people.
What we experienced at McDonald’s Japan — and how we came through it — shows very clearly something distinctive I’ve noticed and come to love about this country. When times are tough, Japanese instinctively pull together. Once they are aligned on a direction they can believe in and get behind, amazing things start to happen. There is no need for individual recognition; it’s all about the team and the power of the group.
Reflecting on my time here, there are a few things that I’ve learned about the Japanese consumer. In many ways, the Japanese market truly is unique. For example, the Japanese love new things, so we are constantly innovating and coming up with new menu items and ways to experience them in a fun way. At the same time, tremendous pride surrounds Japanese cuisine, food culture and local provenance. Reflecting this, we cater to Japanese tastes with ginger pork burgers, teriyaki burgers and have added local fruit flavours to our desserts and shakes. Of course, Japanese consumers also share Canadians’ love of Canadian bacon and maple syrup!
Japan’s high service standards are second to none. Small details garner a lot of attention, and cleanliness is godliness, so our renewed focus on clean restaurants and warm hospitality has paid off handsomely.
In retrospect, I believe that, when faced with product-quality issues such as those we have experienced, the best course of action is to first reassure the Japanese consumer, and then move on to a recovery plan. Listening intently to customers and demonstrating hard work to fix things, really does help regain trust.