Geoffrey Stackhouse, Managing Director, Clarity Solutions
“Corporate Image problems” are to blame for McDonald’s Corp’s stunning 30 per cent drop in profit worth around US$500 million for the last quarter, according to CEO Don Thompson. That’s a cumulative US$2 billion for the full year.
McDonald’s has responded by changing the menu and advertising mix. But that’s like putting lipstick on a pig - it might look different but it’s still a pig.
Fixing an image problem by throwing money at a whitewash campaign doesn’t work anymore. Social media guarantees opposing voices will always be heard. The only way out of an image crisis is to fix the problem and then communicate the truth.
It’s a lesson McDonald's has faced several times this year with a series of crises that have triggered international outrage. Each one has been managed with the same ‘playbook’ and makes a $2 billion case study of what not to do.
In China two food safety scandals have hit hard. Their beef supplier has been charged with ‘intentionally selling expired meat’ to them while their chicken supplier is under investigation for overuse of antibiotics and also using expired meat.
McDonald’s response is a new advertising campaign and new menu items like Green Tea ice-cream.
In the US Celebrity Chef Jamie Oliver exposed McDonald’s practice of processing fatty off cuts, ‘sold at the cheapest form for dogs’, with ammonium hydroxide to use in their burgers. That was back in 2011 and while McDonald's expressed outrage they quietly changed their recipe.
But then they created a second crisis by pursuing Oliver through the Courts. While they addressed the underlying issue they threw fat on the fire by taking legal action. It’s guaranteed to inflame the situation and keep it in the media spotlight. And it’s still making headlines in 2014.
And that’s the same technique they are using right here in Australia.
In Victoria when a local Council knocked back an application for a massive McDonald’s outlet in Tecoma, they fought the decision through the Victorian Civil and Administrative Tribunal and won.
Residents fought back with a well-orchestrated international social and mainstream media campaign which Analysts say has hit the share price. But McDonald’s instigated more legal action against residents which further inflamed the situation.
That was a few years ago, but it's back in the spotlight. McDonald’s has 'helpfully' sent Victorian police to the home of a Tecoma Dad who picked up some McDonald’s branded litter near the store and left it at the store.
Not surprisingly this has fuelled another media storm and another massive backlash this time focussing on inappropriate conduct by the Victorian Police.
So what’s your ‘takeaway’ from McDonald's?
1. Whitewash doesn’t work anymore, the world is too savvy. Most people see right through advertising and revamps, and its usually just more fuel for your opponents. When you are fighting in the Court of Public Opinion you can’t move on from a crisis if you haven’t addressed the outrage and changed your practises.
2. Don’t throw fuel on a fire by pressing unnecessary legal action. Lawyers rarely understand reputation, they just see the opportunity for a stoush. Even if you win in the courts, you’ll most likely lose where it counts.
3. There are no secrets anymore. If you are doing the wrong thing, you will get caught eventually. Fix the problem and put your hand up, or pay the price.