PLANS FOR the local arm of McDonald's to aggressively expand have been suspended indefinitely as the precipitous state of the economy and the slide of the local dollar continues to hit businesses hard.
In March of this year McDonald's (Jamaica) managing director told the Financial Gleaner: "Our plans for expansion include restaurants in Ocho Rios, Cross Roads in Kingston and Portmore (St. Catherine), all of which are on the drawing board right now. We are also considering outlets in Santa Cruz (St. Elizabeth) and May Pen (Clarendon). Over the next five years we will be looking to open up another fifteen restaurants."
Those plans have now been scuppered as McDonald's as well as other players in the fast food business feel the bite of a contracting economy.
Mrs. Greene started off ambitiously, opening twelve outlets in just four years, along the lines of McDonald's tested corporate model but now readily concedes that she has to drastically change her plans if her franchise is to survive in this harsh operating environment.
Speaking to Wednesday Business she said: "We are now holding tight and reducing operating costs largely to starve off redundancies. We have cut back on company cars and are making efforts to reduce our huge telephone bills. With the dollar as it is and the economy making it difficult to survive, we have been forced to make prudent business decisions which sees our expansion plans been put on the back burner. Why dig a hole to fill a hole?"
McDonald's earlier strategy was explained by its local marketing manager, Tara Clivo: "We assume that with the present state of the economy, Jamaica is rock bottom right now. If we put in the restaurants and the infrastructure now, when Jamaica recovers and the economy is enjoying a boom, we will already be in place. If you go into a country that is booming, you are already too late."
Mrs. Issacs-Greene noted that people where not coming to the restaurants because they simply can't afford to and that its earlier strategy that you can expand in a struggling economy had to be revised.
Rather she has shifted direction, chosing to contract her operations as the economy itself contracts. McDonald's has now put in place a " value strategy" that sees the emphasis placed on low cost volume rather than margins. Its menu has been drastically reduced to entice customers with Mrs. Issacs-Greene explaining, "If you raise prices by 10 per cent, you lose 10 per cent". The company is now restructuring its purchasing organisation and is presently looking for a new financial controller.
So what now for the home of the Big Mac which is losing some relish?
Despite reducing advertising costs the company has borrowed a marketing idea from Courts and is offering Suzuki Balenos as the star attractions in its prize draw. This has proved popular and the company is pleased with its success so far. To steer itself away from the economic quagmire, it is now guided by competitive pricing and a reduction of operating costs.
McDonald's (Jamaica) is capitalised at around US$30 million, Mrs. Issacs-Greene claimed. Her company Three Rivers Management operates the franchise in Jamaica and has put in US$10 million with McDonald's Corporation putting up US$20 million mainly for all the buildings and infrastructure making it a sizeable investment which cannot afford to go under.
Commenting on the plight of businesses currently operating in Jamaica Mrs. Issacs-Greene said: "I really don't see the light at the end of the tunnel but it is proving to be a challenge and I have overcome difficult times before, particularly in the seventies when the demisss of the motor industry brought Detroit to its knees yet that town and Chicago as a whole is now enjoying something of a renaissance. I intend to still be around when Jamaica gets back onto the right path and businesses are encouraged to flourish."
