Big Mac Strikes Back

“We’re becoming a nation of hamburger flippers!” cried the economists, more or less. “We’re seeing the McDonaldization of Main Street!” wailed the city planners. When the anti-McDonald’s griping began to heat up not long ago, it even earned a name: burger bashing. All sorts of experts wanted to attack Big Mac as a symbol of all that was wrong with America’s eating habits, its mass culture and its economic development. Walter Mondale, among other politicians, criticized the hamburger chain’s minimum-wage jobs as grim substitutes for well-paying blue-collar work. Nutritionists despaired over the high fat and sodium content of McDonald’s fare, while food snobs ridiculed creations like Big Mac’s “special sauce” as gooey and gross. Even investors, who had been smitten with McDonald’s stock for two decades, were predicting that a glut of golden arches would soon put an end to the chain’s glory days of growth.

But Ronald McDonald and his fans may get the last laugh after all. The world’s largest food-service company (1986 profits of $480 million on sales of $12.4 billion) is showing that it can be far more aggressive, imaginative and socially savvy than almost anyone has given it credit for. McDonald’s is now trimming the fat and shaking the salt from its food, installing sleek outlets in U.S. airports and hospitals, taking its burgers to such far-flung locales as Yugoslavia and Guam and serving as a leading U.S. employer of minorities and the elderly. Thanks to its current vitality, McDonald’s is maintaining its growth while such rivals as Burger King and Wendy’s appear to be slowing down.

McDonald’s is proving to be an almost unstoppable — and in many ways positive — social and economic force. Particularly at a time when so many U.S. businesses are restructuring and getting back to basics, McDonald’s as a corporation looks more and more like a case study in how to concentrate on providing one service exceedingly well. While McDonald’s may still represent junk food and throwaway culture to some people, many others are making a more generous assessment of the hamburger giant’s value. Even Soviet television, which in the past has portrayed the hamburger chain as a capitalist conspiracy to sell tasteless food, broadcast a report last November that lauded a McDonald’s outlet in Manhattan as a model of speedy and friendly service. Intoned the commentator: “Maybe there is something we can learn from this.”

The past few weeks have been typically productive for McDonald’s. At its current pace of opening a new outlet every 17 hours, the chain last month christened some 40 new restaurants in places ranging from Manhattan, Kans., to Munich, West Germany, bringing the total number to about 9,530 worldwide. At the same time, the promotion-minded company launched its largest-ever contest, a Monopoly-based game in which 500 million tickets will be given out and $40 million in prizes awarded. And last week the corporation, which is based in Oak Brook, Ill., and takes pride in its all-American image and the exploits of its millions of alumni, practically burst with delight when one of its former burger flippers, Keith Smart, became the game-winning hero for Indiana in the N.C.A.A. basketball final.

Indeed, McDonald’s has become such a pervasive reference point in American life that many consumers think of the company as a public institution — one that is often more reliable than the post office or the phone company. McDonald’s estimates that 95% of all U.S. consumers eat at one of its restaurants at least once a year, and that the average customer visits the chain 20 times annually. The company claims to serve 17 million U.S. customers each day, providing more than 11% of all dinners away from home and 25% of breakfasts. Observes Conrad Kottak, professor of anthropology at the University of Michigan: “You can hardly spend a day without seeing a golden arch. It’s a symbol of security.”

The golden arches stand tall over the competition in the huge fast-food industry, which rang up sales of $50.5 billion last year. McDonald’s market share: 19%, in contrast to Burger King’s 9% and Wendy’s 5%, according to Analyst William Trainer, who follows the industry for Merrill Lynch. While the other hamburger chains posed fast-growing threats to McDonald’s in past years, the rivals now have generally turned down the heat on their expansion.

One major reason for McDonald’s dominance is the company’s huge advertising budget, which amounted to an estimated $700 million last year, far more than its next two competitors combined. Burger King stumbled during the past year with its nerdy “Where’s Herb?” campaign, while Wendy’s has been unable to follow up on the success of its faddish “Where’s the Beef?” commercials. But McDonald’s made a big impression once again with commercials portraying the chain as a caring institution. “We spend a bundle trying to stimulate good feelings about the company. We don’t knock our competitors,” says Michael Quinlan, the company’s 42-year-old president and chief executive. One McDonald’s spot, called “Silent Persuasion,” in which one deaf student uses sign language to propose to another that they visit a McDonald’s on the way to the beach, was the second most popular U.S. commercial of 1986, according to Video Storyboard Tests, which polls consumers.

McDonald’s has cooked up some popular new products too. Its McD.L.T. sandwich, a lettuce-and-tomato burger packed in a two-compartment box to keep the hot side hot and the cool side cool, has proved to be a beefy competitor to Burger King’s Whopper and Wendy’s Big Classic. The McD.L.T., introduced nationally early last year, is the company’s biggest success since Chicken McNuggets debuted in 1983. At the moment, McDonald’s is test-marketing a more unexpected offering: McPizza.

As McDonald’s outlets multiply, the company is taking an increasingly important role as an employer. The company currently carries more than 560,000 workers on its payroll, up from 233,500 ten years ago. Yet most McDonald’s employees start at the minimum wage of $3.35, which for a full-time worker amounts to only $6,968 a year. For that reason, McDonald’s has been singled out as evidence of the booming service economy’s inability to create dignified and meaningful new work. Says Robert Reich, a lecturer at Harvard’s Kennedy School of Government: “Compared to the old blue-collar jobs that have been lost, these jobs represent a serious setback.”

Instead of viewing McDonald’s jobs as a replacement for lost industrial work, other economists see the company serving a different but still valuable role as an employer of the marginal members of the work force: ghetto youths, undergrads working their way through college, displaced homemakers and retired people. What makes McDonald’s attractive for those employees are the highly flexible work hours and on-the-job training. McDonald’s is the biggest trainer of workers in the U.S., having employed at one time or another an estimated 7% of all current U.S. workers, or about 8 million people. For job seekers with almost nothing to put on their resume, a stint at McDonald’s counts for something. “People who have worked at McDonald’s make excellent bank tellers,” attests Robert Wilmers, chairman of Manufacturers & Traders Trust in Buffalo.

McDonald’s constantly shifts along with the changes in the U.S. work force. For example, the post-baby boom shortage of McDonald’s traditional workers, suburban teens, has prompted the company to recruit older workers through a program called McMasters. Roughly 10% of McDonald’s workers are over 50, and 5% are over 60. At 83, Anne LaFave wields a mop as a cleaning worker at a ( Chicago outlet, a job she has held for seven years. Says she: “I have a whole new family, all the kids in the store. I’m happy to stay busy.”

While McDonald’s employees generally praise their working conditions and the respect accorded them by their bosses, they find the wages inadequate to support one person, much less a family. Rick Laviak, 16, who has worked at a suburban San Diego outlet for more than a year, enjoys his job but thinks his $3.60-an-hour wage is meager considering that he gets no food discount and is expected to act as a teacher for new employees. Says he: “They want me to be a crew trainer without the pay.” Partly for that reason, turnover among hourly workers at McDonald’s outlets is high, sometimes nearly 100% a year.

Yet the jobs are not necessarily dead-end ones, since each McDonald’s outlet offers a career path of salaried jobs in which store managers typically earn $25,000 and junior managers $12,000 to $17,000. And managers can aspire to opening their own McDonald’s, since most of the chain’s restaurants are started by individual entrepreneurs. The initial investment in a franchise outlet is typically $325,000, but the return can be high. Other ambitious store managers can move up to Illinois headquarters, where almost 40% of executives got their start flipping hamburgers. The company employs relatively few M.B.A.s.

But whatever McDonald’s social value as an employer, its impact on America’s nutrition remains controversial. One of the perennial criticisms of McDonald’s is the fat, sugar and salt content of its menu. The Quarter Pounder with Cheese, for example, contains an estimated 1,220 mg of sodium, which for a person on a strict low-salt diet might exceed an entire day’s allotment. Yet during the past several years the company has tried to improve its food’s nutritional value, in part by reducing the fat and salt content of some items. In a current advertising campaign, McDonald’s says it has lowered the sodium level of its pork sausage by 32% and its pickles by 21%. Last year the company started frying its fish and chicken in pure vegetable shortening instead of animal fat, which lowers the cholesterol level significantly.

Nutritionists still say the burger chain should offer a much more balanced menu because of the burgeoning amount of fast food that Americans now eat. Annual per capita french-fry consumption alone, for example, has increased from 2 lbs. in 1960 to 14 lbs. in 1984, according to Michael Jacobson, executive director of the Center for Science in the Public Interest. Jacobson, the Ralph Nader of the fast-food industry, thinks McDonald’s ought to offer some broiled food instead of fried, and points out that the company has been slow to offer such low-fat fare as baked potatoes and salad bars. But McDonald’s is finally starting to cater to the salad set. Right now the company is testing prepackaged, freshly assembled salads in about 40% of its U.S. outlets. The flavors: chef’s, shrimp, garden or chicken oriental.

Only a few years ago, the popular wisdom among fast-food analysts was that McDonald’s growth would have to slow down because it had already built an outlet in nearly every feasible location. Since then, though, McDonald’s has expanded far beyond its traditional base in the suburbs. The company has built more than 50 outlets on U.S. military bases, five on university campuses and one at a public zoo. At St. Joseph’s Hospital in Phoenix, where a McDonald’s outlet has replaced the coffee shop, doctors and nurses line up for burgers between rounds. The company has even developed a McDonald’s small enough to fit in virtual cracks in the wall: McSnack. These tiny stands, three so far, have been installed in locations too cramped for a regular McDonald’s, and offer shortened menus and limited seating.

Another potential impediment to McDonald’s growth was the resistance of neighbors. Residents of elite communities, among them Martha’s Vineyard and Manhattan’s Upper East Side, staged bitter fights to block the building of local McDonald’s outlets. Stung by such criticism, McDonald’s has tried to make its presence more welcome in recent years by toning down its garish yellow arches and designing restaurants that insinuate themselves into the neighborhood. On the Mississippi River in St. Louis, a McDonald’s is housed in a floating reproduction of an 1880s side-wheeler, complete with brass-trimmed chandeliers.

While McDonald’s once avoided inner-city neighborhoods, it now pushes into depressed areas where some other nationwide chains would fear to make any investment. Says Company President Quinlan: “Often we’re the only bright, shiny thing around. Sometimes we’re even the showcase.” A total of some 650, or 9%, of McDonald’s U.S. outlets are owned by blacks and Hispanics; to boost that average, 45% of potential owners currently in training are members of minority groups.

McDonald’s next frontier is the rest of the world, where it has already * made considerable progress. The company boasts some 2,140 foreign outlets in 42 different countries ranging from Nicaragua to the Netherlands. Today the golden arches grace some of Europe’s most expensive real estate: next to Westminster Cathedral in London, on the corner of the Boulevards St. Michel and St. Germain in Paris, and opposite Parliament in the Hague. The biggest Mac branch of all, with 575 restaurants, is in Japan, where the company is known as Makudonarudo, or Makku-san for short.

Not everyone, however, has been delighted with McDonald’s hamburger imperialism. In the Brazilian city of Sao Paulo, where McDonald’s has 16 outlets, hundreds of local restaurant owners and tavernkeepers marched through the streets last May to protest the incursion of American junk food, shouting, “Down with hamburgers!” and “Long live the corner bar!” Despite such friction, McDonald’s plans to open 200 foreign outlets this year.

McDonald’s corporate structure has become a model often cited by management gurus. The company’s highly decentralized management runs its franchises with an unusual mixture of strict regimentation and entrepreneurial freedom, a style handed down by the late company founder, Ray Kroc. On one hand, McDonald’s is a stickler for uniformity, indoctrinating its future managers at Hamburger University, where they learn that a 5-gal. pickle pail must contain at least 3,000 slices. On the other hand, McDonald’s realizes that corporate headquarters is not always the best place to come up with market-sensitive ideas. One object lesson was a headquarters brainstorm years ago known as the Hulaburger, a pineapple-and-cheese combination that flopped in a big way. By contrast, the Big Mac, Egg McMuffin and McD.L.T. were all dreamed up by individual McDonald’s operators.

Sticking intently to the one business it knows best, McDonald’s has been able to stay clear of Wall Street’s merger-and-restructuring mayhem. The single-minded outfit prefers as few distractions as possible from its imperatives of “cleaner, faster, hotter.” Diversify? No way, said Chairman Fred Turner recently to a fellow executive. “We have 16,000 rest rooms,” noted Turner. “As soon as those are all clean, we’ll talk diversification.” Considering McDonald’s penchant for perfectionism, that time may be a long way off.