Industry Focus

NEWS BELOW: McDonald's is now recruiting new franchisees. McDonald's seeks new franchisees Fast food giant McDonald's is engaging in its first serious recruitment of new franchisees in a decade on the back of regional growth and retirements. Catriona Noble, Chief Executive Officer of McDonald's Australia, says many of the business's new stores are in regional areas. Noble adds that, as the chain has been in the Australian market since 1971, some long-serving franchisees are calling it a day. "That has meant we do have the opportunity to bring new people into the system." A burger flipper at Macca's from the age of 14, Noble has climbed the ranks to take on the top job in Australia since leaving university. She says the increasing value of McDonald's restaurants over the past decade created some concerns internally about the ability of potential new franchisees to meet equity requirements. "But that hasn't really proven to be an issue," she says. "So we see a level of confidence and, maybe in tougher times, franchising has a lot more structure and a proven track record as opposed to somebody thinking 'I really want to be an entrepreneur and go and open my own thing'." Noble, one of the champions of healthier menu choices at McDonald's during the past 10 years, says her restaurants are now releasing new wraps and salads as part of an ongoing commitment to provide food choices ranging from "healthier right through to indulgent". "It's not like we are shifting everything to low fat. We definitely see ourselves having a role in people's lives as a treat food as well … but we just need to make sure that we have the full breadth of choice." She is also proud of Macca's switch to a canola oil blend for cooking that "took thousands of tonnes of saturated fat out of Australians' diets". "That's led a lot of competitors to change their oils as well." With the aim of staying ahead of the pack, McDonald's is trialling mobile ordering innovations as part of a long-term plan to build a stronger communications platform with each customer. Through stores in the Wollongong area of NSW, it has also been testing a different 'dinner plate' experience in restaurants where food is served on crockery and cutlery rather than in the usual takeaway packaging. "But we don't see ourselves launching that as a single initiative," says Noble. "It's part of a much bigger play at dinner that will include the menu, but also the physical environment of the restaurant and the service model we use—so really every touchpoint with the consumer." Regardless of franchising market evolutions, Noble says a strong relationship with a financial partner is crucial in today's business world. McDonald's believes it is essential to have three strong legs of the business stool—great franchisees, a strong corporation itself and excellent suppliers in areas such as food, marketing and finance. "So having trusted financial partners is critical and Westpac is first class," she says. "There's no problem for me to talk to [Westpac CEO] Gail Kelly or to [Group Executive, Westpac Institutional] Rob Whitfield or any of the senior executives. They really believe in the notion that each part of the partnership has to be strong and each part of the partnership has to make a margin—and they're first-class partners for us." As competitors such as Subway grow in Australia courtesy of smaller store footprints and lower entry prices for franchisees, Noble says McDonald's still prefers a model whereby it owns significant sites "on the corner of Main and Main Street", which franchisees can run for decades. "So when the time comes to retire and they have their exit strategy they can really take the fruits of their labour and extract the equity that they have built over time." As McDonald's prospective new franchisees undergo an intensive interview, training and assessment process, Noble says the focus at Macca's is on new store growth and organic growth through higher same-store sales. "That's critical to a model like ours because each individual franchisee has to be growing their income and getting a return on investment. It's not just a consolidated income statement that is important." Franchising • Issue 1 5

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