It’s not easy being an industry leader, but Jim Skinner, vice chairman and CEO of McDonald’s Corporation, assured area business leaders that he wouldn’t have it any other way.
“Being the lead dog is tough, but if we weren’t, we wouldn’t like the view,” said Skinner at the Executives Breakfast Club of Oak Brook.
Skinner approached the group by painting a picture of “the McDonald’s that you don’t know.” He attempted to remove the often popular perception of McDonald’s as the epitome of the faceless corporate empire and presented it as a misunderstood corporate leader that, in fact, is the opposite of claims by its critics.
It’s no secret that McDonald’s has been the source of some public scrutiny at the hands of documentary films such as Super Size Me and books like Fast Food Nation, and is often at the center of the debate on obesity in America and globalization.
Skinner recognized all aspects mentioned above, including the works of popular culture, and said that while they all bring up good arguments, McDonald’s is often portrayed in an unfair light, while competitors get a break.
However, Skinner did not want to appear as if he were whining about it.
“When you are the biggest and most recognizable you become the poster child for many different issues,” he said. “I think we are portrayed unfairly because of our position, but I wouldn’t have it any other way. We are big and powerful, but because of that we get a chance to make a difference.”
Skinner pointed out that while McDonald’s is one of the largest and most recognizable global entities, it is almost always locally based because of the franchise system.
“All of our countries have local management,” he said. “If you are in a McDonald’s in France you are in a 98 percent French company.”
Skinner used the Chicago area as a prime example of what he calls MacEnomics.
“We are not insensitive to local needs,” he said. “The majority of our stores are locally owned. In the Chicago area three-fourths of our stores are locally owned.”
Those stores have a trickle down effect because they employ 20,000 people who contribute $665 million in salary to the area. The stores also generate $1.5 billion in sales and the company pays $100 million in sales tax to the state.
Skinner said that McDonald’s has also addressed the obesity issue by offering a wider variety of menu items, including as salads and fruit, and by making ingredients available to the public.
“We can sell whatever we want, but choose to continue our efforts to provide our customers with multiple options,” said Skinner. “We purchased 34 million pounds of apples last year, which makes us the largest apple buyer in the U.S.”
Skinner also added that McDonald’s has the highest food quality standards in the industry.
The perception of fast-food employees is another issue that Skinner took to task. While fast-food employees are often portrayed as unskilled, he pointed out that upward mobility is present in McDonald’s corporate structure. Someone can start all the way at the bottom as a fry cook and eventually become the CEO, just as he did.
“My first job was at the McDonald’s in my hometown of Davenport, Iowa,” he said. “I think it is important to point out that of the eight CEOs this company has had, three of them began in the restaurants and one began in the mailroom.”
The other CEOs are accounted for by founder Ray Kroc and “a couple of accountants in between,” he joked.
Overall, Skinner said McDonald’s is moving in the right direction as it has improved sales each of the last four years after incurring a year-long slump.
“We are working on five years of same store sales growth,” he said. “Last year we increased sales by 20 percent and shares quadrupled to an all-time high.”
Asked about future growth, Skinner admitted that while numbers may not be as large as they have been in the past, the corporation is still anticipating future growth.
In 2003, the company opened 2,000 new stores, while in 2006 the net total of new stores was 400, after opening 800, yet closing down 400, he said.
The company’s growth rate has been a steady 1 percent over the past four years and analysts predict that it should increase to 2 percent by next year, he said.
And even though it would seem that McDonald’s has already proven itself to be the giant of its industry, Skinner referred to a quote from the company founder Ray Kroc when predicting where McDonald’s would be in 20 years.
“When asked in the 1950s about the future of McDonald’s Ray Kroc answered ‘I don’t know what we will be selling in the year 2000, but it sure will be a (heck) of a lot more than anyone else.’”