McDonalds Corporation And The Issue of Health and Nutrition

An Arthur Page Society case study in issues management

The Issue

Obesity is a pervasive problem in America, and as people increasingly become overweight, their health suffers

64% of all Americans overweight and 30% are obese; the percentage of children age 6 to 19 that are overweight has doubled in the last two decades

Health risks: heart disease, Type II diabetes, high cholesterol, high blood pressure

Targeting McDonalds

The nutritional content of fast food--high in fat, sugar, and calories--is linked to weight gain and consequent health problems. McDonalds bears the brunt of criticism because: McDonalds is a powerful multinational corporation and the fast food industry leader

McDs has more than 31,000 restaurants in 119 countries McDs feeds more than 46 million customers per day McDs employs more than 1.5 million people

The Opposition

There are organizations, associations, government agencies, consumer groups, activists, bloggers, etc. critical of McDonalds on the issue of health and nutrition

This case study focuses on major attacks occurring from 1994 to 2006

McLibel 1994-1999

McDonalds sued two protestors for allegedly libelous statements made in a pamphlet, Whats Wrong with McDonalds

PR disaster that made McDonalds look like a bully Built the media agenda on issues unfavorable to McDonalds Appellate court ruled that the defendants were justified in claiming that regular customers of McDonalds did face a heightened risk of heart trouble Pamphlet later reproduced on the Internet to massive international audience Court case cost McDonalds over a million dollars Court case provided the material for a full length documentary released in 2005, McLibel

McLawsuit 2002-2003

A group of obese teenagers who ate at McDonalds 3-5 times per week sued McDonalds for causing their weight problems. They alleged that: McDonalds advertising and promotional representations create a false impression that its food products are part of a healthy lifestyle McDonalds said it would have nutritional information available to customers but it wasnt The court ruled in favor of McDonalds but the resulting press coverage put the issue once again in the forefront. This case was what gave Spurlock the idea for Super Size Me. 2002 first time McDonalds posted a quarter loss in its history.

Fast Food Nation 2001, 2006

A book highly critical of the fast food industry New York Times best seller Version directed to children 11-15 years old, Chew on This, published in 2006 Fast Food Nation released as a movie in November, 2006 Movie tag line: The Truth is Hard to Swallow

Super Size Me, 2004

One mans journey into the world of weight gain, health problems, and fast food. Morgan Spurlocks documentary account of his personal experience over a 30-day period of eating nothing but McDonalds food. He gained 25 pounds and suffered physical ailments. Spurlock called for eliminating super size option and providing nutritional information. Educational versions for middle and high school students now available.

The Public Relations Function of Issues Management

Corporations must work to solve problems when confronted by people and organizations that may be against what the corporation says, offers, or does Corporations must strive to repair relationships with external publics and enhance its corporate reputation McDonalds must adopt strategic communication responses to those who disapprove of what they see as McDonalds role in promoting obesity and health problems.

Response Options in Issues Management

Acquiescence

Stop doing what is bothering critics Work collaboratively for consensus and compromise Discredit the opposition Argue your side Take legal action

Negotiation (Two-way)

Confrontation (One-way)

McDonalds Responses The Bad

One-way, asymmetrical communication

McDs has avoided dialogical, or two-way, communication with critics. McDs declined invitation to appear with Schlosser on NBCs Today Show and instead sent a statement of facts and told them to visit the web site. McDs insists it did nothing in response to the film Super Size Me and has stated it had no need to plan proactively for the release of the film Fast Food Nation.

Denial of any concern or compromise with critics

Main message is one-way: More aggressive in telling our side of the story Denial of investigative reports

Quote Examples

We dont sell nutrition and people dont come to McDonalds for nutrition. Rather than fight a defensive war of attrition by responding to constant nutrition attacks, lets not even deal with it. (1986, PR executive handling McD account) We have media days and fact sheets that are available through our web site, as well as platforms that will afford us any opportunity to talk about whats important to McDonalds. We cannot be overly concerned about anyone else. (2006, Walt Riker, McDonalds VP of Corporate Communication and Media Relations, regarding the release of the movie Fast Food Nation)

Ineffective Response: Promising action but not delivering on action

McDonalds promised in 2002 to change its trans fat cooking oil to a healthier alternative. Customers complaints led McDonalds to cancel that action Legislation has been proposed in 2006 to ban trans fat cooking oils in restaurants Other fast food chains have voluntarily instituted the change
(Questions for discussion next slide)

Questions for Discussion

How can the impact of changing the taste of their French fries be weighed against the health harms of trans fat cooking oil? How is credibility affected by promising actions but not delivering on them? Are there occasions when a company may take a hit on an immediate action in order to build better relationships for the future?

McDonalds Responses The Good

Corporate social responsibility blog

Contains section Engaging in the Global Obesity Dialogue Allows feedback and discussion Adding more menu choice Providing nutrition education Supporting physical activity

The balanced, active lifestyles initiative

Theme: Its what I eat and what I doIm lovin it

Marketing Actions

Menu choice: premium salads, bottled water, low fat/skim milk, white meat chicken Go Active! Happy Meals for adults Walking program and free pedometers Get Moving with Ronald McDonald and McMunchright Celebrity brand ambassadors Nutritional labeling on products (in most restaurants within one year period) Collaboration with Scripps Research Institute for fighting childhood obesity and Type 2 diabetes Ubiquitous advertising campaign emphasizing physical activity

Timeline

By 1986 Aware of Issue 1994 McLibel McDonalds food can be harmful to health 2001 Fast Food Nation 2002-2003 McLawsuit Need for nutritional information; food harmful to health McDs posts first quarter loss in corporate history Per share stock price plumments McDs promises to replace trans fat oil McDs introduces healthy options in 2003 2004 Super Size Me Should cancel super size option, need for nutritional information McDs cancels super size option McDs introduces Balanced, Active Lifestyles initiative 2006 FDA introduces proposal ban trans fat oil in restaurants 2006 Fast Food Nation, the movie and Chew on This, childrens book McDs starts putting nutritional information on packaging McDs still hasnt replaced trans fat oils

First Steps of Effective Issues Management

Listen for threats through issue/environmental scanning Determine whether the issue will affect the organization/corporation If yes, give the issue priority in proactive, timely strategizing

Points of Discussion Timeline

Effective issues management calls for monitoring and identifying emerging issues early in order to plan proactively. McDonalds knew of the issue for years, yet delayed taking actions until it was defensive rather than proactive.
(Questions for discussion next slide)

Questions for Discussion

With advance knowledge of the brewing issue, what proactive steps could McDonalds have taken? Why is it advantageous to take action proactively rather than defensively?

Page Principles: Tell the truth

Denied Super Size Me had anything to do with cancellation of the super size option even though McDonalds withdrew the option just six weeks after Super Size Me premiered Denied any concern or need to plan proactively for the premiere of Fast Food Nation Denied investigative reports regarding an internal memo sent to franchisees to discredit Eric Schlosser Claimed to have nutritional information available for 30 years

Page Principles: Listen to the customer

McDonalds has experienced moderate and continuous growth in sales and per share stock price 2003-2005 However, fast food companies such as Chipotle, Buffalo Wild Wings, Panera Breat, Panda Express, Quiznos, Starbucks, and Jasons Deli are the ones reaching highest growth in the fast food industry

Page Principles: Manage for tomorrow

Positive: McDonalds has instituted several marketing programs addressing the need for balanced, active lifestyles Positive: McDonalds has expanded healthy menu choices Negative: McDonalds has refused to engage in the debate over nutrition and health with its critics

Page Principles: Conduct public relations as if the whole company depends on it

Emphasis is placed on marketing, rather than public relations McDonalds needs to focus on public relations reputation building through increased transparency and dialog

Page Principles: A companys true character is expressed by its people

Top management acknowledges a one-way message strategy of emphasizing their need to do a better job of telling their story Top managements statements tend to project a position of power rather than a more concerned and open viewpoint

Page Principles: Remain calm, patient, and good-humored

McDonalds has done an excellent job of remaining calm and patient However, McDonalds has not shown a sense of humor in the face of targeted criticisms Question for discussion: What would be the best way for McDonalds to maintain a sense of humor in regard to the issue of health and nutrition?

Conclusion: McDonalds Challenge

The main question facing McDonalds is whether they can continue their world dominance in the fast food industry by promoting active, healthy lifestyles when their mainstay products continue to be linked to obesity and related health problems. McDonalds has done a laudable job in marketing the concept of consumer choice and in establishing a generous corporate social responsibility program. However, in the U.S. at least, McDonalds has not reduced advertising to children, reformulated its trans fat cooking oil, or lowered fat, salt, and/or calorie counts on its core products. Rather than diminishing, the issue of health and nutrition continues to escalate and McDonalds remains a key target in 2006.