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McDonald’s Corporation And The Issue of Health and Nutrition

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1 McDonald’s Corporation And The Issue of Health and Nutrition
An Arthur Page Society case study in issues management

2 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

3 Targeting McDonald’s The nutritional content of fast food--high in fat, sugar, and calories--is linked to weight gain and consequent health problems. McDonald’s bears the brunt of criticism because: McDonald’s is a powerful multinational corporation and the fast food industry leader McD’s has more than 31,000 restaurants in 119 countries McD’s feeds more than 46 million customers per day McD’s employs more than 1.5 million people

4 The Opposition There are organizations, associations, government agencies, consumer groups, activists, bloggers, etc. critical of McDonald’s on the issue of health and nutrition This case study focuses on major attacks occurring from 1994 to 2006

5 McLibel McDonald’s sued two protestors for allegedly libelous statements made in a pamphlet, “What’s Wrong with McDonald’s” PR disaster that made McDonald’s look like a bully Built the media agenda on issues unfavorable to McDonald’s Appellate court ruled that the defendants were justified in claiming that regular customers of McDonald’s did face a heightened risk of heart trouble Pamphlet later reproduced on the Internet to massive international audience Court case cost McDonald’s over a million dollars Court case provided the material for a full length documentary released in 2005, McLibel

6 McLawsuit A group of obese teenagers who ate at McDonald’s 3-5 times per week sued McDonald’s for causing their weight problems. They alleged that: McDonald’s advertising and promotional representations create a false impression that its food products are part of a healthy lifestyle McDonald’s said it would have nutritional information available to customers but it wasn’t The court ruled in favor of McDonald’s 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 McDonald’s posted a quarter loss in its history.

7 Fast Food Nation 2001, 2006 A book highly critical of the fast food industry New York Times best seller Version directed to children 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

8 Super Size Me, 2004 “One man’s journey into the world of weight gain, health problems, and fast food.” Morgan Spurlock’s documentary account of his personal experience over a 30-day period of eating nothing but McDonald’s 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.

9 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 McDonald’s must adopt strategic communication responses to those who disapprove of what they see as McDonald’s role in promoting obesity and health problems.

10 Response Options in Issues Management
Acquiescence Stop doing what is bothering critics Negotiation (Two-way) Work collaboratively for consensus and compromise Confrontation (One-way) Discredit the opposition Argue your side Take legal action

11 McDonald’s Responses – The Bad
One-way, asymmetrical communication McD’s has avoided dialogical, or two-way, communication with critics. McD’s declined invitation to appear with Schlosser on NBC’s Today Show and instead sent a statement of facts and told them to visit the web site. Denial of any concern or compromise with critics McD’s 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. Main message is one-way: “More aggressive in telling our side of the story” Denial of investigative reports

12 Quote Examples “We don’t sell nutrition and people don’t come to McDonald’s for nutrition. Rather than fight a defensive war of attrition by responding to constant nutrition attacks, let’s 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 what’s important to McDonald’s. We cannot be overly concerned about anyone else.” (2006, Walt Riker, McDonald’s VP of Corporate Communication and Media Relations, regarding the release of the movie Fast Food Nation)

13 Ineffective Response: Promising action but not delivering on action
McDonald’s promised in 2002 to change its trans fat cooking oil to a healthier alternative. Customers’ complaints led McDonald’s 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)

14 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?

15 McDonald’s Responses – The Good
Corporate social responsibility blog Contains section “Engaging in the Global Obesity Dialogue” Allows feedback and discussion The balanced, active lifestyles initiative Adding more menu choice Providing nutrition education Supporting physical activity Theme: “It’s what I eat and what I do…I’m lovin’ it”

16 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

17 Timeline By 1986 Aware of Issue
1994 McLibel – McDonald’s food can be harmful to health 2001 Fast Food Nation McLawsuit– Need for nutritional information; food harmful to health McD’s posts first quarter loss in corporate history Per share stock price plumments McD’s promises to replace trans fat oil McD’s introduces healthy options in 2003 2004 Super Size Me – Should cancel super size option, need for nutritional information McD’s cancels super size option McD’s 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, children’s book McD’s starts putting nutritional information on packaging McD’s still hasn’t replaced trans fat oils

18 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

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

20 Questions for Discussion
With advance knowledge of the brewing issue, what proactive steps could McDonald’s have taken? Why is it advantageous to take action proactively rather than defensively?

21 Page Principles: Tell the truth
Denied Super Size Me had anything to do with cancellation of the super size option even though McDonald’s 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

22 Page Principles: Listen to the customer
McDonald’s has experienced moderate and continuous growth in sales and per share stock price However, fast food companies such as Chipotle, Buffalo Wild Wings, Panera Breat, Panda Express, Quiznos, Starbucks, and Jason’s Deli are the ones reaching highest growth in the fast food industry

23 Page Principles: Manage for tomorrow
Positive: McDonald’s has instituted several marketing programs addressing the need for balanced, active lifestyles Positive: McDonald’s has expanded healthy menu choices Negative: McDonald’s has refused to engage in the debate over nutrition and health with its critics

24 Page Principles: Conduct public relations as if the whole company depends on it
Emphasis is placed on marketing, rather than public relations McDonald’s needs to focus on public relations reputation building through increased transparency and dialog

25 Page Principles: A company’s 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

26 Page Principles: Remain calm, patient, and good-humored
McDonald’s has done an excellent job of remaining calm and patient However, McDonald’s has not shown a sense of humor in the face of targeted criticisms Question for discussion: What would be the best way for McDonald’s to maintain a sense of humor in regard to the issue of health and nutrition?

27 Conclusion: McDonald’s Challenge
The main question facing McDonald’s 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. McDonald’s 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, McDonald’s 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 McDonald’s remains a key target in 2006.

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