It was only a matter of time before I turned my
attention to one of the daddies of the world’s brands, McDonald’s, in perhaps
the daddy of all markets, China.
In fact this week’s big brand public relations
issue extends beyond just the one brand into the fast food industry as a whole.
Competitors from Yum! Brands, Pizza Hut and KFC, plus others such as Burger
King and Papa John’s are also involved.
Last week it was revealed that in south-east Asia
these companies had been using meat products, primarily chicken and beef, that
had passed their expiry date. They were, to all intents and purposes, rotten.
Shanghai Husi Food, owned by US-based OSI GROUP, had supplied the meat to them.
In Shanghai, the local Food and Drug Administration raided the supplier,
seizing more than 5,000 boxes of expired meat and arresting five employees.
Following this discovery, the fast food companies
apologised to consumers in China and pledged to remove the products concerned. McDonald’s
was one of the hardest hit brands, because it had to stop selling products in
Japan and Hong Kong, as well as in China.
By the beginning of this week, OSI recalled all
products made by its Shanghai facility, and apologised in a news conference.
However, according to a Reuters
report, their action did not stop criticism for McDonald’s from
disappointed diners.
Nevertheless, according to The
Wall Street Journal on Monday, whilst Yum!’s brands have stopped using OSI,
McDonald’s said it would continue to work with them. The Journal speculated
that this is because MacDonald’s feels it can address the problem quicker than
finding a reliable new supplier, and because in reputational terms, it would
not do them any favours to sacrifice the supplier.
Keeping faith with this errant supplier is an
interesting strategy by McDonald’s, particularly bearing in mind that its
business and its reputation have already been dented by this incident.
McDonald’s is no stranger to taking a public bashing for its products and
policies, and it has proven to be a big enough behemoth to absorb such blows.
Nevertheless, it has to balance the damage caused from maintaining such a
stance, with the risk of seeming ruthless if it were to fire its supplier and
source product elsewhere. What is clear from this situation is that when the
supply-chain goes bad, the consumer brand bears the brunt of public opprobrium,
even if the fault lies elsewhere. The
South China Morning Post highlighted this lose-lose scenario. McDonald’s
not only suffered a product shortage, which irritated diners, but it also
seemed reluctant to acknowledge that it had a problem, at least in the eyes of
Hong Kong residents.
Arguably, the company should have applied more
stringent inspection and due diligence standards to its suppliers. However, in
this instance, the fact that a number of other separate companies were affected
suggests that McDonald’s due diligence was no weaker than anyone else’s, and it
perhaps mitigates the fault that lies with them. Nevertheless, this isn’t the
first time that multinational food-service brands have suffered from such
supply-chain incidents, and it certainly won’t be the last.
In fact, as I write, turning my eyes from east to
west, McDonald’s is enduring another storm in Russia, where its cheese is being
investigated for excessive levels of antibiotics. The cheese itself is produced
further west, in the Czech Republic and Germany. Just last week, the Russian
consumer protection agency announced that it will be taking the company to
court for selling foods that contain more fats and carbohydrates than national
regulations allow.
And so the company’s battles go on.
- Can it continue to fend off the brickbats that come its way?
- How do you feel it has handled this latest controversy?
- Can it continue to thrive, even under such criticism, or, like all empires, will it inevitably fall?
- What do you think?
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