It's no secret that McDonald's Japan's business was in the doldrums for most of 2015. Nikkan Gendai (April 2) reports that a number of unprofitable outlets were closed, and revenues nationwide were down to about 70% from their peak.
In Yokohama in January, the Canadian president of McDonald's Japan, Sarah Casanova, attended her first conference of store managers since assuming the company's reins three years ago.
"Like what happened previously to the Daiei supermarket chain, as the scale of McDonald's became bigger, its staffers became arrogant," remarked corporate consultant and author Masaru Komatsuda. "Eiko Harada, the former president, took up the principle of 'genba-shugi,' paying personal visits to outlets all around the country. Once he noticed a counter employee mix up an order, and he explored solutions and wound up changing the position of the shelf to fix it. But Ms Casanova does not appear to have heeded similar advice."
When several reports surfaced from July 2014 about use of expired chicken and foreign objects in the food, moreover, Casanova's efforts at damage control failed to stem customers' estrangement.
But it wasn't so much the revelations of rancid chicken, the writer opines, that spurred McDonald's Japan's decline, which had already begun half a year before the scandal.
Rather, it can be blamed on "structural problems."
"First of all, its meals provide excessive calories," Komatsuda points out. "If you look at a branch located in the suburbs, you can clearly see that as many as half the customers in the store are middle-aged persons. Any business executive seeing this would immediately feel a sense of alarm."
Take two of the most recent additions to its menu: a "Teri-tama Burger" (hamburger patty with teriyaki sauce topped with a fried egg) and the "Grand Big Mac" that super-sizes its predecessor. A set including the former, M-size fries and a café latte comes to 1,157 kilocalories -- considerably more than a "Nami-mori" beef bowl, miso soup and fresh veggies (712 kilocalories) served as a set at Yoshinoya outlets. Mac's offering would be a surefire formula for weight gain, especially for preteens who go there.
There's also the matter of value for money. The set menu items at McDonald's tend to range from 600 to 700 yen levels, with the Teri-tama set priced at 660 yen -- 150 yen higher than the aforementioned set served at Yoshinoya. And while there are three so-called "one coin" (i.e. 500 yen or less) sets on Mac's menu, such as the "Chicken Cheeseburger" set, now that more convenience stores are providing eat-in counters for their inexpensive boxed meals, it's not surprising that budget-conscious customers have been forsaking McDonald's in greater numbers.
Another factor that may have put a damper on the chain's popularity is the perception by customers of its outlets appearing dingy and untidy. Workers paid on an hourly basis are increasingly assigned more tasks, and with a labor shortage looming, they shun tasks such as policing up the restrooms. In the dining areas, discarded refuse is left unattended to.
"At present, we are right in the midst of efforts to boost our QSC (Quality, Service and Cleanliness)," a McDonald's Japan spokesperson told Nikkan Gendai, citing three of the four benchmarks of the company philosophy (the fourth being Value). "When individual customers leave the premises, we've been instructing shop staff to make the rounds and clean up."
The good news from the company is that from December of last year, business data indicates that Makudo appears to be recovering somewhat. While the number of customers visiting the golden arches last December showed a decline of 2.6 percentage points from Dec. 2014, sales revenues and expenditures per customer both posted gains, of 5.4 and 11.0 points respectively. And figures of all three benchmarks showed gains in January and February.
The ultimate question may be: will the latent brand marketing power that Makudo has built up in Japan over the past 45 years manage to effect a comeback? Whatever else one might think, the writer concedes that its new Teri-tama burger was actually pretty tasty.© Japan Today