McDonald’s in Norway Team 4 Robert Jameson Becky Tibbenham Charlotte Jorgensen Matthew Byler

McDonald’s  World’s largest chain of hamburger restaurants  Serve 60 million people in 117 countries daily  32,000+ locations worldwide  465,000 full-time employees (2008)  1.5 million total employees worldwide  Annual revenue of $22.6 Billion  QSC&V (Quality, Service, Cleanliness & Value)

McDonald’s: Comparison with Competitors # Stores# Employees# CountriesRevenue Burger King12,15041,00076$2.54 billion KFC15,00024,000109Not given McDonald’s32,000465,000117$22.6 billion Pizza Hut12,68530,00092Not given Subway33,733(not given)92$9.03 billion

McDonald’s History  1940s: Began by brothers Richard and Maurice McDonald in San Bernardino, California  1948: "Speedee Service System” established the principles of the modern fast-food restaurant  Current corporation’s Founding  April 15, 1955  Franchised restaurant by Ray Kroc - in Des Plaines, Illinois  Ninth McDonald's restaurant overall  Kroc later purchased McDonald brothers’ equity  He led its worldwide expansion  1965: Company listed on the public stock markets

McDonald’s History  May 4, 1961: McDonald's first filed for a U.S. trademark on the name “McDonald’s”  September 13, 1961: Filed a logo trademark on an overlapping, double arched "M" symbol

McDonald’s History  Kroc noted for aggressive business practices, so the McDonald brothers left the fast food industry  McDonald brothers and Kroc feuded over control of the business, as documented in their autobiographies  McDonald brothers’ original restaurant now a monument  International symbol of globalization  Because of its expansion into many international markets, symbol of globalization and the spread of American way of life  Its prominence has made it a topic of public debate about obesity, corporate ethics, and consumer responsibility

McDonald’s in Norway  Entered Norway in 1983 (the 31 st country)  Initially limited menu: only 4-5 burgers to choose from  Many different things tried, but today similar menu  Currently 69 total stores  Last year’s revenue: one billion Kroner ($167 million)  Mixed perceptions by Norwegians

McDonald’s in Norway  “The restaurants stretching from Kristiansand in Vest-Agder, to Steinkjer in Nord- Trondelag”

 Very different architecture, so location of stores not always where American’s expect

McDonald’s in Norway: Restaurant Structure - Franchises  Primary system when expanding abroad  75% of McDonald's restaurants worldwide are franchises  85% of McDonald’s in Norway are franchises  McDonald’s believes franchising a key reason for success  Owners can influence their own work  Can also use company resources: system's experience, network, and expertise in operations and development  Locally-owned better for environment  Allows for local customization of menu

McDonald’s in Norway: Franchising System (Comparison) Franchise Fee Start-up Cost Basic Royalty Advertising Royalty Net Worth Requirements Burger King$50,000 $300,000 – $2.8 million 4.5%4.0%$1.5 million KFC$ $1.2 - $1.8 million 4.0% or $600/mo 5.0%$1.5 million McDonald’s$45,000 $ million 12.5% Included, but 4.9% service fee No minimum, but requires $500,000 liquidity Pizza Hut$25,000 $317,000 - $3 million 6.5%None$1 million Subway$15,000 $78,600 - $238,000 8%3.5% $ ,000 but requires $ ,000 liquidity

McDonald’s in Norway: Restaurant Structure - Franchises  Goal: Fewer number of franchises, but larger in size  More profitable to run 3+ restaurants  Owners change initial contract for how much paid to McDonald’s  Depends on size of restaurant  Varies 5-25% of sale  Franchisees start “their restaurant” in one of two ways:  Renting agreement: 3 year  Buy it right away

McDonald’s in Norway: Suppliers and Distribution  Control every stage of to ensure product consistency  Same distribution system  Norwegian government ensures only approved, high quality food is used (more on this later)  Supplier: HAVI Logistics firm  Only approved McDonald’s distributor  McDonald’s is their only customer

McDonald’s in Norway: Quality Assurance  Stays in close contact with customers’ tastes and needs, despite rapid global expansion.  Through quality assurance centers located throughout Europe (similar to those located throughout America)  Aims to provide 100% satisfaction  Provide training for employees at “Hamburger Universities” (similar to those in America)  Promises same basic menu  Promises same quality, service, cleanliness and value (QSC&V)

McDonald’s in Norway: Environmentally Friendly  Government  Encourages new technology  Eight companies, 20 million NOK for five years  McDonald’s  Raw Materials: 75% Norwegian  Logistics: Alternative fuels, Careful shipping planning  Heating: Energy-saving systems  Packaging: 80% recycled  Waste: Frying oil for biodiesel  Recycling: cardboard, paperboard, foil packaging, bottles

 Partnership to work across EU  links 29 countries together (similar to different states in the USA with transfers, etc)  Employees from more than 70 countries  Must be at least 16 years old  Can be full-time or part-time  McDonald's is one of the biggest employers for youth: Most of their employees are between 16 and 25 years old and working part time in conjunction with school  2008: Voted fourth best workplace among large companies in Norway and 36 (out of 1,250) across Europe McDonald’s in Norway: Quality Assurance McDonald’s in Norway: Employees

McDonald’s in Norway: Hamburger University  Same program worldwide  Managers go here to learn how to own and operate a McDonald’s restaurant  Learn how to maintain QSC&V  All products, kitchen layouts, and procedures are strictly controlled and essentially the same worldwide  If restaurants cannot maintain QSC&V they are closed, even if highly profitable

 Comprehensive Training & Leadership Development: “With so many career opportunities, it is important that we have equal opportunities for training. This is one of the reasons for the high satisfaction among McDonald's employees.”  All employees given the opportunity to further educate themselves by learning new tasks McDonald’s in Norway: Hamburger University McDonald’s in Norway: Employee Training

 McDonald's education prepares people for the challenges that come with increased responsibility  Advancement in the career ladder is very easy  Five-level Career Ladder  Restaurant Staff (crew)  Assistant Shift Leader  Shift Leader  Assistant Restaurant Manager  Restaurant Manager

McDonald’s in Norway: Employee Training  Continuing education consists of practical and theoretical exercises, courses and exams.  Separate, modern training center in Oslo’s main office  By following the course programs, employees qualify for the next step on the career ladder  Also cross-border cooperation on training and continuing education

McDonald’s in Norway: Employee Wages and Benefits  All employees receive a salary adjustment on April 1  Norwegian Working Environment Act  Norwegian Tariff Agreement: Pay based on age  Salary rates:  Depends on seniority and evening/weekend work  Ages 16-17: to per hour ($14.63 to 16.28)  Ages 18-20: to per hour ($18.76 to 22.76)  Age 20+: Starting salary of $ ($22.76+)  Benefits  All receive pension and insurance  May receive bonus, gift card, gym membership

 80% of their food comes from Norway  Gluten Free (only country for McDonalds)  Kjerstin: “There is one menu that is supposed to be available in every country in the world. [But] each country has to look at who their customers are and choose a selection based on this. For instance, in some countries they have fried snails in addition to fries. In Norway, [there is] a big focus on a health menu, with salads, yoghurt, fruit, carrots, salmon wrap… but this is not that profitable. The customers go there to buy a burger.” McDonald’s in Norway: The Menu

June 13, 2007: Salmon Wrap

McDonald’s in Norway: The Menu  1994 Introduced McLaks Sandwich (salmon)

McDonald’s in Norway: The Menu  Burgers are similar (Big Mac, Quarter Pounder, etc.)  Side items  French fries  Carrots  Salads  Fruit  Portion Sizes  Burgers same size  Fries and soda are smaller portions  No soda refills

 Norway very health conscious  Food has to be approved by Norwegian government: guaranteed high quality & manufactured in sustainable way  “Our standards often exceed national food safety standards, so our guests will be assured of optimal products and meals when they are in the restaurant.”

McDonald’s in Norway: Price Comparison Norway has the most expensive Big Mac in the world (2008)

McDonald’s in Norway: The Menu McDonald’s in Norway: Price Comparison Meal for Two: 1 Filet O’Fish 1 Big Mac 1 Cheeseburger 2 French Fries 1 Smoothie 1 Diet Coke $31.50

McDonald’s in Norway: The Experience  Focus: Convenience  Central locations  Hours: 11 am to 11 pm. (some 24/7 during the summer)  Focus: Families with children  Playgrounds  Toys in Happy Meals  Comprehensive Birthday Party Packages  Locations near kid-friendly attractions  Example: Gjøvik they sell children’s advent calendar

McDonald’s in Norway: The Experience  Similar to America  Drive Thru  Happy Meals  Similar Food (mostly)  Different from America  No breakfast (not profitable)  Some menu items  Different for Norwegians  Drive-thrus uncommon  Official Website: “Many of our restaurants are drive-thru restaurants.”

 “We want to give something back to the communities where we operate. Local franchisees often support local clubs and associations to help in their local environment. At national level we have established the Ronald McDonald Children’s Fund, an independent foundation that works to raise money for chronically ill children.” McDonald’s in Norway: The Experience McDonald’s in Norway: Giving Back

McDonald’s in Norway: Marketing  Same competitive strategy as in U.S.  Be first in your market  Establish brand as rapidly as possible  Advertise heavily  Strategy has helped McDonald’s succeed in Norway over other fast food competitors  However, they have had to adjust advertising campaigns to be more classy and sophisticated

McDonald’s in Norway: Marketing Advertisement for burger in Norway

McDonald’s in Norway: Marketing  More sophisticated in Europe  Similar to Sweden  Norway redecorating stores  Modern  Customer-friendly  Look similar so easy to recognize

McDonald’s in Norway: Competitors  Many American fast food restaurants not in Norway  Burger King main competitor  Gas stations also competitors (7-Eleven)  McDonald’s competitive advantage: Drive-thrus  Only restaurant with drive-thrus in Norway  Drive-thrus account for 50% of their sales

McDonald’s in Norway: Difficulties  Advertisement for McAfrika burger  Norway one of world’s richest countries  Bad timing: Africa’s worst hunger catastrophe  Solution: Donate percentage of profits to African Charities

McDonald’s in Norway: Difficulties  Norwegian Hotel and Restaurant Workers Union (HRAF)  Agreement in 1930s & 1940s that related to hospitality industry  1983 When McDonald’s entered, would not sign agreement  High turnover  Young workforce anti-union  1993 Agreement signed  Only wholly-owned stores  Franchises exempt because independent owners

McDonald’s in Norway: Managing  Egalitarian: more like a coach than a typical boss  Little distance between employees and managers  Jante Law: does not think that they are better than their team members  Make employees feel actively engaged and valued Active in decision making  Norwegian management culture with McDonalds Policy and Procedure (QSC&V)

Interview  Kjerstin Bratelien Larsen