Get a demo Do I subscribe? News sign-up
Print

How McDonald's Japan went from loss to profit in less than 3 years

News, 06 June 2017
Topics

TOKYO: Following record losses, McDonald's Japan needed to understand its customers and rediscover what made the brand important to them. By adapting to consumer demands and strengthening the brand, McDonald's returned to profit.

Sarah Casanova, speaking at Advertising Week Asia, said complacency in the wake of outstanding 2010 results had seen long-time strengths become weaknesses amid unprecedented change in the category, according to WARC's exclusive report: From hero to zero and back again: McDonald's brand 'do-over' in Japan.

"(McDonald's was) the biggest quick service restaurant in the whole country in 2010... But just when you reach a peak like that is when you're most susceptible to complacency. And sure enough, after 2010, McDonald's Japan started to lose its way," Casanova said.

Competition from convenience stores and other restaurant formats was weakening McDonald's position. Furthermore, she said, "we had lost what had drawn so many people to McDonald's, especially families. We lost our sense of fun, and passion, and energy. The organization was paralyzed."

By 2015, McDonalds was down a full 30% from the highs of 2010, and had to report a ¥25 billion yen (US $225.4 million) loss.

In response, the brand began to listen to its customers, and found that again and again "people did not want McDonald's to be something we're not - like a salad bar or whatever."

"They wanted the original McDonald's back. They wanted us to bring back what they loved about McDonald's. A fun place to go with great tasting burgers at great value."

Yet the brand needed to demonstrate a certain amount of progress, responding to consumer demands for more information: "In talking to moms, I knew they wanted more information about our food, where it comes from, how it's made, who responsible for food safety and quality".

In tandem, customers were crying out "please make McDonald's fun again," she added. The response was to beef up the brand's digital offering, with a website that would tell customers everything they needed to know about McDonald's food.

In addition, a new app containing much of the same information as well as offers and discounts played well in smartphone savvy and convenience-obsessed Japan.

"We've had huge success with it so far. 34.5 million downloads - that's 25% of the population of Japan. And it makes our app the fifth largest app in Japan, behind Yahoo, Facebook, Line, and Twitter," Casanova said.

From a forecast loss of ¥25 billion yen (US$244.5 million) in 2015, Casanova reported an expected record profit of ¥15 billion yen (US$135 million) in less than three years, with digital marketing having made "a significant contribution" to those results.

Data sourced from WARC

Topics