Research Report - McDonalds Australia

Research Report: McDonalds Australia Laura Pozzobon 101623725 | Friday 10:30

1.0 Introduction The topic of environmentalism is widely discussed in the current Australian climate, therefore it is important for companies to acknowledge this viewpoint. The client, Mcdonalds Australia, is looking to review their current sustainability practices and their customers beliefs around the environment.

This research report will explore Mcdonalds as a business and conduct primary and secondary research into their practices. Research will also be conducted into their customer base’s viewpoint on sustainability and what they are looking for from the comapny

2.0 The Client McDonalds Australia® is an internationally owned fast food company specialising in the sale of burgers and fries.

They have Australia’s largest market share of Fast Food and Takeaway Service’ industry (IBIS World, 2019) but is looking to “increase [their] traffic market share within QSR by +3%, from 46% to 49% by June 2020” and cement the brand as a preferred fast food destination (McDonald’s Au: Sustainability 2020 Brief, 2019). Their service is created with convenience and affordability in mind, which is often why their customers choose them. However, they are now looking for ways to make “convenience and sustainability go handin-hand” by making their stores an eco-friendly experience (McDonald’s Au: Sustainability 2020 Brief, 2019). In recent years, they have made an effort to run a more sustainable practice by installing efficient lights, rainwater tanks and solar panels in new stores and ensuring their staffs recyclable waste is sent to an appropriate facility. (Mcdonalds Au, 2019)

2.1 Brand Identity McDonalds’ is committed to ensuring their brand image is ‘family friendly’ and ‘for Australians’, often using the slang ‘Maccas’ in marketing, for example thier ‘my maccas’ app. They use a welcoming and fun tone in all areas of the business.

2.2 Competitors McDonalds main competitors include Competitive Foods Australia (Hungry Jacks) and Yum! Restaurants Australia (KFC).

Mdconalds has the largest market share of the ‘Fast Food and Takeaway Service’ Industry with 25.1%. Followed by Hungry Jacks (8.6%) and KFC (6.0%) (IBIS World, 2019).

Fast Food and Takeaway Service Industry 25.10%

8.60%

6.00%

Mcdonalds Hungry Jacks Market share

60.30%

KFC Other

0.00% 20.00% 40.00% 60.00% 80.00% 100.00%

Source: IBIS World, 2019

Hungry Jacks has recently implemented Vegan options into their menu, in a bid to appeal to more customer’s food lifestyles as well as reduce the amount of meat their company produces (Hungry Jacks, 2019). KFC has been known to explore edible packaging in stores internationally to reduce the amount of waste produced, however no such initiatives have taken place in Australia (Packagingnews, 2017)

3.0 Research This report uses both primary and secondary research to explore McDonald’s sustainability and environmentalism. This includes their current business practices as well as their customer’s perspective. Primary research was conducted in the forms of: a survey of Victorians (quantitative), interviews with customers (qualitative), interview with a previous store employee (qualitative) and observational data (qualitative).

3.1 Survey

140 Australians were surveyed on their lifestyles, McDonalds preferences and their sustainability habits. All their responses can be found in Appendix 1. From this survey, it is clear that almost all Australians are conscious of sustainability and their own impact.

They do their best to recycle (Figure 6) and are often environmentally conscious, or at least try to be (Figure 4). 96% of respondents stated that they would be interested in an environmentally conscious restaurant, and of those responses a majority feel as though it would influence their choice. These results show that Australians are interested in the environment and believe that sustainability is important.

Figure: 16

“Everything they can: have recyclable cups or ways to recycle cups, get rid of placemats, make sure when people choose to eat in they aren’t given takeaway cups, discounts for using sustainable options, minimise food waste ect.”

93%

interested in an environmentally conscious restaurant

The respondents were also given the opportunity to suggest ways that Mcdonalds could improve their businesses environmental impact. The most common answer by far was the abolishment of single use rubbish plastics, such as straws and lids, for a recyclable option.

It can be seen in Figure 16 that 50% of respondents recommended some sort of packaging solution, showing that Australians think “long term sustainable packaging should be a priority for investment”. There were also many suggestions for an option for customers to bring their own containers, with suggestions for discounts for users who bring their own reusable containers and for dine in customers to be given a reusable cup instead of takeaway ones.

“Be more environmentally concious with packaging. Provide clearer instructions on packaging to customers” “Have the option of reusable containers that you bring with you for things like burgers ect. or make them recyclable instead of the waxy material” Have clear info on packaging about recycling”

“Discounts for customers who bring their own containers... And using less packaging” “Consider packaging, provide seperate bins for recyclable products in store, clearly label recyclable packaging, encourage people to use and bring in their own containers ect.”

3.2 Interviews with customers Two people were interviewed on their views of McDonalds and how they view them in terms of sustainability to gain more qualitative data.

Interview 1: Interviewee 1 was a 21 year old male who goes to Mcdonalds weekly. He stated that he does want to be environmentally conscious, but it doesn’t cross his mind. He had not noticed that the restaurants don’t have recycling bins. He thought that it would be “a good idea for maccas to be more environmental” but he does not know how.

However, Mcdonalds action or lack thereof will not change his opinion of the brand, and he will continue to attend weekly.

Interview 2: Interviewee 2 was a 35 year old married female with two young children. She stated that she liked Mcdonalds for the convenience and the family friendly environment, but tried to avoid going too often due to health consciousness for her kids. She expressed that she wants to live more sustainably but doesn’t know how. “I get so confused with all the different recycling now, and I just think Im doing it wrong so I just end up throwing it all in the rubbish”. She would like big companies like Mcdonalds to make it easy to be sustainable and to recycle. She also believes solar panels and energy efficient appliances would be an effective way to lower greenhouse emissions.

3.3 Interview with staff

1 23

A previous Mcdonalds employee was also interviewed in an attempt to discover the companies business practices. Although she stopped working for them in 2018, she was still able to give insight.

Waste There is a significant amount of waste produced due to the ‘fast’ nature of the food. “‘Cause the food is kept in the heater until it is ordered, if not one orders it after a certain amount of time we have to chuck it out, so there is a lot of waste from that”.

Few sustainable systems There are few systems to be sustainable when working. All the food is wrapped in plastic that cannot be recycled and “they didn't have a place where we could dispose of oils. They’d make us wash it down the sink”. Only cardboard boxes had a recycling system that was routine.

BYO may not work She did not believe a ‘bring your own’ system would work, as “peoples containers would probably just get confused in the kitchen, and then people would get the wrong food”.

3.4 Observational Data Points to note of instore practices: 1. Napkins and straws are left available for custemers to help themselves to, often leading to people taking too many and throwing them away unused.

2. There is only general waste bins.

3. The outdoor signs are illuminated during the night. However, these lights are fixed with energy efficient bulbs to reduce carbon emmissions.

4.0 Secondary Research Mcdonalds has been working to make their stores more environmentally friendly for many years. It goes as far back as the 1990s, where polystyrene packaging was replaced for cardboard. In more recent times they have made small changes to their restaurants such as implementing (Mcdonalds Au, 2019): • • • • • • • • • •

Rainwater tanks, Energy efficient lighting and air conditioning, Solar panels, Use of recycled concrete and steel, Time flow taps Energy efficient LED technology in external signage, rather than fluorescent lamps, As cardboard contributes to around 50% to total kitchen refuse by volume, they recycle all cardboard boxes ‘Clean Streets’ program, to keep streets around the stores clean Water efficient spray guns used for washing up in the kitchen Have set environmental guidelines for their suppliers.

They have also made many commitments to improve their sustainability as a business.

“By 2025, 100% of McDonald’s guest packaging will come from renewable, recycled or certified sources”

Internationally, McDonalds has had varied success in implementing sustainable business practices. One successful endeavour began in November in Indonesia, where Mcdonalds launched a movement called #StartWithoutStraw. 190 stores across the country no longer use plastic straws (Rasidi, 2018)

5.0 Target Description Mcdonalds attempts to target a large audience generally. However, this audience is often from a lower to middle income households, due to the inexpensive nature of the products. There is no gender specificity and usually they reach out to people aged 4-45, depending on the product; for example Family boxes vs loose change menu (Dudovisky, 2016). Mcdonalds is a convenient and quick serving food establishment, meaning they attract customers that are busy and need quick meals, such as trade workers, parents with children, and busy workers.

In relation to the breif, the target audience would be:

Consumer Profile:

Australian millennial (Gen Y) Is environmentally conscious and is always thinking of the best lifestyle choices to benefit the environment. They look for brands that they trust in terms of “sustainability”, “honesty”, “locally”, “responsibility” (Smart Insights, 2018). This modern person is active on social media and attempts to be active in spaces that are going to make a difference. They live in a suburban area, and know of all the Mcdonalds locations around their house.

They have been going to Maccas since they were a kid, and has fond memories of getting Happy Meals with their parents. However as they have grown and become more educated in their schooling and work, they have come to notice the bad sustainability practices of the company. Leading them to limiting their Mcdonalds purchases. They are looking for sustainability to become the norm with large companies.

6.0 Key Insights and Findings From the research conducted, it is clear that a long term sustainable solution is what is required from Mcdonalds. As they will be rolling out recyclable packaging by 2025, it would be benefitial for them to start educating Australians on correct recycling practice as well as promoting how to take those practices home with them. This could be via printing on current packaging, so people can read when they are eating. It could also be augmented into the app and on various other online channels.

They also have the opportunity to rally with environmenalists to encourage the government to take action on the recycling crisis in the country. For example, promoting the petition by ‘Environment Australia’ (2019) to encourage the Victorian Government to create long term recycling solutions,

7.0 Conclusion The convenience and afforability are appealing, and their welcoming and caring environment creates a brand experience that they love. However this perception is tainted by the unsustainable practices that the business conducts. The research conducted has shown that Australians are interested in long term sustainability becoming common practice for restraunts. The survey found that they want to be environmentally freindly in their every day, and would like large companies to make that lifestyle simpler for them.

Mcdonald’s customers are becoming more aware of the environemnt and their environmental impact. To retain and increase their marketshare, the company will need to respond to this changing social viewpoint.

Customers are looking for sustainability to be convenient, as Mcdonalds has always been.

8.0 Appendix

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9.0 References Dudovskiy, J. (2016). McDonalds Segmentation, Targeting and Positioning - Research-Methodology. [online] Research-Methodology. Available at: https://research-methodology.net/ mcdonalds-segmentation-targeting-and-positioning/. [Accessed 10 Sep. 2019] Environment Victoria. (2019). Premier Andrews, fix Victoria’s recycling crisis. [online] Available at: https://environmentvictoria.org.au/action/premier-andrews-fix-victorias-recycling-crisis/ [Accessed 12 Sep. 2019].

Hungry Jacks (2019). Our New Vegan Range!. [online] Available at: https://www.hungryjacks.com.au/better-food/vegan-en [Accessed 12 Sep. 2019].

IBIS World Industry Report (April 2019) Fast Food and Takeaway Food Services in Australia [online] Available at: http://clients1.ibisworld.com.au.ezproxy.lib.swin.edu.au/reports/au/industry/default.aspx?entid=2005 [Accessed 10 Sep. 2019].

Mcdonalds Au (2019). Initiatives and Trials | McDonald's Australia. [online] Available at: https://mcdonalds.com.au/learn/responsibility/maccas-and-the-environment/initiatives-and-trials [Accessed 10 Sep. 2019].

McDonald’s Au (2019) Sustainability 2020 Brief Packaging News (2017). KFC addresses waste with the invention of edible bowls - PKN Packaging News. [online] Available at: https://www.packagingnews.com.au/sustainability/ kfc-addresses-waste-with-the-invention-of-edible-bowls [Accessed 12 Sep. 2019].

Rasidi, Yasmin (2018). Anti-Plastic Straw Movement Trending In Indonesia, What’s Next? | Via News Agency. [online] Available at: https://via.news/environment/anti-plastic-straw-movement-trending-indonesia/ [Accessed 12 Sep. 2019].

Smart Insights (2018). Millennial consumer trends 2018. Smart Insights. [Accessed 10 Sep. 2019]