McDonald’s 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 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

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

McLibel 1994-1999 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

McLawsuit 2002-2003 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.

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 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.

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.

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

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

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)

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)

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?

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”

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 – McDonald’s food can be harmful to health 2001 Fast Food Nation 2002-2003 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

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. McDonald’s 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 McDonald’s 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 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

Page Principles: Listen to the customer

McDonald’s 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 Jason’s Deli are the ones reaching highest growth in the fast food industry

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

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

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

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?

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.