McDonald's expansion and cultural adaptation in Saudi Arabia

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McDonald's in Saudi Arabia

History of McDonald's in Saudi Arabia

The American fast food giant and ultimately, the cultural symbol which is McDonald's, entered the Saudi Arabian market in 1993. Since then, they have managed to open 83 stores and have achieved tremendous success. Their operations are run through franchising contracts and their success is due to the strong capabilities of the managers to understand the market and adapt to its needs, while also implementing the McDonald's culture. "As the Saudi Licensees of this internationally renowned brand, we are proud to have been serving Saudi customers since 1993, opening no fewer than 83 restaurants in that time, and providing meals for quite literally thousands of people every day. We believe that McDonald's success in the Kingdom is due to a number of factors: the 100% pure quality of our food, its nutritional content - and of course the enormous and abiding popularity of McDonald's as a place for families, fun and entertainment" (McDonald's Arabia, 2008).

Along their over a decade of operations in Saudi Arabia, the franchise has received numerous awards from both the parent company in the U.S., but also from international business organizations. These include the Outstanding Sales Award (1996), the Outstanding Architectural Coordination Award (2000), the Coca Cola Golden Quality Award (2003) or the 2001 Service Excellence Award from Top Ten Business Magazine, achieving first place among all Quick Service Restaurants in Jeddah. Today, there are over 100 branches strategically located in 16 major cities of Saudi Arabia. The stores have contributed immensely to the development of communities and the most eloquent example in this sense is the fact that 80% of the commodities used by McDonald's are produced in Saudi Arabia or other Arab countries (McDonald's Arabia, 2008).

2. Difficulties Encountered

The first difficulty encountered was that of reticent perception. The population found it quite difficult at first to accept the American brand, however a symbol of freedom, into their homes. Foremost, the challenge was increased by various allegations that the organization was contributing with funds to terrorist groups. Also, the general belief is that the Americans support the Israeli troops in their ongoing conflict with the Palestinians. This didn't help either with creating a favorable perception of the fast food giant. In time however, with perseverance, patience and the best strategic approaches, the organization was able to gain public trust and respect.

Another issues of a more cultural nature revolved around the Muslim religion. In this order of ideas, the people in Saudi Arabia cease their daily operations five times to pray. This undoubtedly meant that during those times, there would be no customers to serve and consequently, revenues would stop five times a day. And not only this, but the employees would also stop working. Considering that the customers stop coming in and ordering throughout prayer, the workers could carry on their operations and prepare the meals. But if they would also cease to work, losses could be registered. However, the damage caused by not complying with the local religion would have been far worse than the ceased sales and as a result, the McDonald's stores close five times a day.

Finally, another difficulty was related to the traditions in the Saudi Arabia, which still fail to recognize the equality of genders. As such, the women are required to wear vales at all times so to cover themselves from being seen by men; they are only allowed to take them off in the household. Offering separate facilities for men and women was quite difficult to achieve, but a compromise was reached in the end.

3. Design

It is without any doubt that McDonald's is indeed the ultimate epitome of corporate success due to their ability to understand and adapt to the market. There are numerous examples in this sense; for instance, when all fast food chains were signing franchising operations in Russia (and failing), McDonald's delegated its own people, and succeeded (they now own 80% of the entire Russian market), (Wilson, 2004). Another outstanding example is given by the design of each and every one of their stores, according to various features, such as regional or local culture. "McDonald's has an architectural formula for any city on the planet, and it's as standardized as the burgers" (Ward, 2003).

With intense consideration towards the local culture, religion, traditions and ways, the architects designed the McDonald's stores in a unique manner. Not only do they close five times a day for prayer, they have been built to respect the old traditions. In this order of ideas, they have two separate facilities. One is for single men and the other is for families. "In Saudi Arabia, each restaurant is really two restaurants," says Ron Boneau, senior director for international development. "One section is for single men, the other for families." The booths of the family section have doors and walls so women can unveil and eat without being seen by other men" (Ward, 2003).

Also to adapt to the requirements of the region, the McDonald's stores in Saudi Arabia, and all Arab countries for that matter, do not serve pork-based products. Another important aspect of the McDonald's stores in Saudi Arabia is that two of them are located in the Holly City of Makkah; and they are quite unique. "These restaurants are the only two (2) restaurants in the world that serves exclusively to Moslem customers. These restaurants are also the only two that are fully staffed with Moslem employees, from the Service Crew to the Restaurant Manager level" (Banton, 2000).

5. The Future

In 1994, McDonald's International made a statement presenting their future plans to open hundreds of new stores; the numbers were between 900 up to 1200 stores across the globe. This venture was backed by the belief that the global locations would be able to register sustained growth in sales of a mean 20% per annum (Nations' Restaurant News, 1994). And their expectations were met as the industry continued, and still continues, to grow.

Today, the Saudi Arabia McDonald's is centered on achieving sustainable growth through the development and implementation of the most suitable strategies. In this sense, they continually research the market to identify new trends and demands. A current project considers the opening of 50 new stores by the end of 2010. They will have a changed design and the menus will meet additions. "The move to expand the Saudi operation of McDonald's Corp. will create hundreds of thousands of job opportunities for Saudi nationals," said Prince Mishal Ibn Khalid Al-Saud, RICC's president, while giving an overview of the plans and policies of McDonald's group" (Khan, 2005).

Future plans also refer to further diversifying the product offering by enlarging it with new meals. The company is also focused on increasing their customer palette by attracting more local consumers and presenting them with meals made from traditional ingredients, such as Arab bread, grilled chicken, lettuce, tomatoes and Arab sauce, all found in the most popular sandwich in Saudi Arabia, the McArabia (Alkhereji, 2003). The company is committed to serving other similar products.