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The VICE Guide to Australian Dollars

Why is McDonald's Losing Money Everywhere but Australia?

Markets in the US, Middle East and the Asia Pacific are all down, but strangely McDonald's profits in Australia are up. We asked why and ate burgers.

by David Allegretti
20 March 2015, 2:00am

Photo by the Author

McDonald's has just released their most recent sales figures. And the conclusion? Around the world McDonald's is losing money. Sales in the US have fallen 4 percent, while in the Middle East, Africa and Asia Pacific that's 4.4 percent. Only Europe has remained steady, but strangely Australia and New Zealand have turned a healthy profit. In fact, here the fast food conglomerate has somehow crawled from decade-low return last year, to a 25 percent profit increase this year. That's a return of $234.4 million since September 2014. So the question must be asked, what's wrong with us?

VICE spoke to a number of dieticians and researchers for an answer. None knew for sure although they all mentioned McDonald's presence on social media. As Dr Melissa Stoneham, Deputy Director of the WA Public Health Advocacy Institute, pointed out, "McDonalds is on Facebook, Twitter, and Instagram. They've got their own app with a GPS telling you where the nearest store is. This all makes them seem fun but more importantly, accessible."

This thing about digital media isn't just an observation. McDonald's has long seen Australia as the place to test international promotions, beginning in 1993 when the first McCafe was rolled out in Melbourne. And in November last year, Australia was the first to receive McDonald's new global app, which offers customers a loyalty rewards program and custom made burgers. Along with the app, McDonald's revamped their social media presence and introduced their "Create your Taste" menu, months before it appeared in the US.

The results seem to be showing. Their Instagram campaign broke recall records among the 2 million people who saw it, while McDonald's is currently the second most popular brand on Australian Facebook. Tellingly the brand was at number 11 in early 2014. More Australians arealso searching McDonald's than Americans, according to Google Trends. And all of this led McDonald's digital manager, Mark Wheeler, to glowingly tell The Australian, "that for us, brand uplift leads to sales." The article went on to attribute the company's local success to their early and heavy implementation of digital media.


Their touch-screen thing

I'll admit I'm kind of bummed to discover that the answer is in digital media, and not in some cultural defect, but I figured I should try their new gimmicky machines anyway. Their aforementioned "Create your Taste" menu allows customers to build their own burgers with a touch-screen at the restaurant door. The process is simple enough. You just walk up to one of the massive touch screen displays and start swiping. The prompts are relatively straightforward — select your bun, select your ingredients; pick your poison.

I selected some bacon-fuelled monstrosity and waited. What's interesting is that while Australia seems to be remaining buoyant, there is an international retreat from this style of food. According to Michael Moore, Vice President/President Elect of the World Federation of Public Health Associations, the reason is that healthy eating education is finally starting to have an effect. "What we've seen over the last 10 years is a very rapid increase in obesity and in people consuming unhealthy food," says Michael. He tells me this has occurred at the same time governments and non-government organisations have invested heavily in dietary education; a situation which is forcing a kind of Darwinian selection. "A company that doesn't provide healthy food is now going to see a reduction in their profits," he says. "This seems reasonably apparent to me."


It looked better before than it felt afterwards

A McDonald's employee named Stephanie delivered my meal. She wouldn't pose for a photo but she was happy to discuss the restaurant's new touch screen. "People like getting it done themselves," she says. "But most people can't figure it out. We have to show heaps of people and most give up and order at the counter." As for Australia's unique loyalty to the arches, Stephanie isn't sure. Grill'd was her preference, she said. "People here just like gimmicks."

Some names have been changed

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