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Big Mac's big S'pore jump
Teh Shi Ning
Sat, Oct 17, 2009
The Business Times

IT appears that McDonald's has super-sized itself in Singapore.

Some 30 years on, from when its first Singapore restaurant in Liat Towers served up a record-breaking number of hamburgers one October day, McDonald's many outlets now serve 1.2 million customers here each week. In fact, the fast-food chain has become 'omnipresent in many Singaporeans' lives', says Alex Yeo, who heads its operations here.

But, with competition heating up, dishing out the burgers in great quantities no longer suffices to keep a chain leading the fast-food pack. In 2007, there were 315 fast-food outlets here, generating $37 million in operating profits and producing $189 million in value-add.

The industry has been resilient against the recession. The Department of Statistics' monthly catering trade index shows receipts from fast food outlets rising by a larger percentage than other restaurants and caterers' in most of the past 12 months. Turnover increase has also been greater for fast-food players than for the food and beverage industry overall.

Market share is not easy to gauge, as the individual fast food chains do not readily release sales figures specific to Singapore. But, with 112 out of the 300 plus restaurants across the island, McDonald's clearly has the lion's share of physical outlets.

McDonald's is also unique in that it does not operate on a franchise model in Singapore - though hugely famous for franchising success elsewhere. All outlets here are now owned and operated by McDonald's Singapore.

Obvious competitor Burger King has about 40 outlets run by Bonvest Holding's Bon Foods Pte Ltd - with a sole concept outlet in the new ION Orchard owned by the head company. The six Carl's Jr outlets are run by Aspac Food & Beverage. Other fast-food names such as Long John Silver's, MOS Burger and KFC have between 17 and 26 restaurants each, while fast-growing Subway has a franchised network of 72 outlets.

So McDonald's appears to be leading comfortably in the outlets count. It opened a higher number of restaurants in this past year, than it did in the four preceding years, says Mr Yeo, and more openings are being planned.

Still, competition is beefing up in the burger arena. From coffeeshop Botak Jones' styled offerings to higher-end restaurants serving up gourmet speciality burgers, and even the likes of local fast-food joint SuperDog - product competition is there. But McDonald's does not see its competition as arising from any defined group alone, says Mr Yeo. 'People just have so many more choices now - whether in terms of food, pricing and concepts.'

He thinks that as an eating establishment, McDonald's competes for the consumers' food-dollar - the amount any given consumer spends on food in any form and anywhere.

Hence, the need to raise the diversity and quality of its services and the sprucing up of its restaurants. The introduction of its 24-hour delivery service in 2005 is one which has had a significant impact on its business, Mr Yeo says. McDonald's own study of the food-delivery market here shows that it now captures 40 per cent of that pie.

Other services are being introduced - such as provision of WiFi and live screening of English Premier League matches in many of its outlets.

Also, new concepts such as McCafe, and interior design - couched seating and more muted colour tones - have been introduced into its restaurants to appeal to the consumer, Mr Yeo says. McDonald's has brought in designs from Europe, Australia and the US which are being rolled out in outlets according to their location and the crowd they draw. It intends to finish its first round of remodelling all restaurants here by 2011.

McDonald's seems to have survived the vilification of both company and food this past decade - best captured by the likes of Fast Food Nation or Super Size Me. But to counter any bad press about the nutritional and health value of its food, McDonald's here now offers an 'open-doors kitchen tour' for the public to learn about its food sourcing and preparations.

On the corporate side, McDonald's Singapore has also over the years gained a reputation as a good employer, with several human resource awards to its name. 'The main challenge now, is really to stay focused to reinvest in both people and the business,' says Mr Yeo.

All management executives here will head back to the restaurants to take orders, serve French fries, and clean the kitchens, to mark its Founder's Day later this month. After all, Mr Yeo says, the restaurants are still where the real magic of McDonald's business happens.

 

 
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