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4-Traders Homepage  >  Equities  >  Nyse  >  McDonald's Corporation    MCD

MCDONALD'S CORPORATION (MCD)
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McDonald : He's lovin' it

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05/06/2017 | 11:46am CET

May 06--Hester Chew calls himself "Thaiporean", a Singaporean who has lived and worked in Thailand half his life.

The 56-year-old began his career here as a troubleshooter for a multi-billion-baht food business some 29 years ago. Today he is a major shareholder and the chief executive of McThai Co, the direct licensee of the McDonald's chain in Thailand.

"Having been in Thailand for nearly three decades, I think everything is interesting here, especially the food," Mr Chew says. "There are several local foods, and of those from the North my favourite is khao soi. When you go down to the South, you can try another kind of cuisine."

The country has a variety of regions, such as mountains and beaches. Thai culture and history are also interesting.

"Thai politics can teach you a lot about the people and culture because of the constant changes," he says. "Thais often invoke the concept of kreng jai, which is important for foreigners to learn. But all in all, Thailand is quite a melting pot."

Mr Chew was asked to come to Thailand in 1988 to be general manager of KFC Thailand.

"In the early 1980s, quick service restaurants [QSR] were very popular, so I decided to join the industry, starting as a management trainee at KFC in Singapore. One month after that I became a restaurant manager. I was so lucky because the company was short of manpower," he says with a laugh.

Career success came both by accident and effort.

"Fortune is not long-lasting; people have to work hard first. This is my basic principle for work success," Mr Chew says.

When he joined KFC Thailand 29 years ago, there were only five KFC outlets and four McDonald's restaurants in the country. Within 13 years, the number of KFC branches grew to 300.

Apart from KFC, Mr Chew became adviser at several food and consumer product companies. He decided to start his own QSR business in 2006 by joining with Vicha Poolvaraluck, chief executive of Major Cineplex Group Plc, to hold some stakes in McThai Co.

Mr Chew used his extensive experience in the QSR industry to set a vision for McThai. He introduced McCafe, a separated coffee and dessert station, at most branches, and the concept has proved highly successful.

He strengthened the company's fundamentals by promoting some staff from within as well as bringing in new blood to the organisation. He repositioned incentive schemes, changed the way customer service operates and altered the restaurant's look.

Perhaps most noticeable, McThai offers several menu items to meet local demand, such as rice dishes Mc Khao Krapao and McD Porridge (this dish was copied by McDonald's branches in China, Hong Kong and Taiwan), as well as creating Mc Patong Goh (Chinese dough sticks that were copied at branches in Malaysia).

The image of McDonald's has also changed under Mr Chew's guidance, from traditional fast-food eatery to lifestyle restaurant with a new look and atmosphere because of different store lighting, colours, decor and an "urban" theme.

"The restaurants are more welcoming to customers," he says.

During the past seven years, McThai aggressively pushed the drive-thru concept, and Mr Chew believes the idea has finally caught on here.

In a market where convenience is key, the brand also added 24-hour service at some locations starting in 2006. It introduced online ordering and mobile point-of-sale service in 2014, allowing customers to pay by credit card for takeaway.

Another innovation is McEasy Order, a digital menu touchscreen and mobile application for ordering. Some locations also offer free WiFi.

"I'm seeking new ways to fulfil the McDonald's brand promise in terms of value, quality, service and cleanliness to make it the quick service restaurant of choice for Thais," Mr Chew tells the Bangkok Post.

The chain's global supply system seeks the best-quality ingredients from around the world, he says.

Mr Chew believes that improving internal processes is essential for a quick-service industry. Staff training is his top priority because "they deliver happiness and satisfaction to customers".

"We never cut costs in training people because it's important to our quality and services. We also never stop seeking better investment solutions for the current environment."

For instance, McThai decided to reduce the size of drive-thru restaurants to 350-440 square metres during the economic slowdown from 550-600 sq m. When the economy improved, it vertically extended these branches to become two-storey buildings, providing more space for customers.

McDonald's store count has grown to 241 in Thailand, up from 93 in 2006. Despite the impressive growth, it has not been without obstacles, Mr Chew says.

"The most difficult challenge is people, because McDonald's is a people company more than a food company," he says. "We focus on behaviour more than attitude. I don't like my staff to tell lies, and I want them to have discipline."

He wants the team at each branch to function like a watch: one person is one gear; if the watch stops, nobody can work.

"Though I work hard, I play harder and drink hardest. I have an open-door management policy -- staff can come to me any time, but nobody dares," he says with a laugh.

Mr Chew visits McDonald's stores twice a week. He also scouts potential locations by himself because some require a high investment cost.

He loves to read. He considers Lee Kuan Yew, the former prime minister of Singapore, his idol because of his never-ending struggle to overcome obstacles, his open mind and his acceptance of differences. The late King Bhumibol Adulyadej is another role model for Mr Chew because of his sufficiency economy philosophy.

"All work is tiring, but if you enjoy your work, you won't feel tired," he insists. "I never give up, regardless of the obstacle, because I know it could affect our 9,000 staff. I believe all problems have solutions."

Sometimes Mr Chew is able to solve problems by himself, but other times he relies on ideas from a network of chief executives in fields ranging from food and finance to insurance and cement.

He says he releases his stress by drinking, driving and playing golf with friends.

"2016 was a difficult year for McThai, with slower sales and growth," he says. "However, I am confident in the pickup of the Thai economy because we have a strong foundation."

McThai invests in employee engagement through training and development because running a great restaurant by a well-trained and motivated team is essential, he says.

"Our strategy is for customers to think of our chain first when they are hungry, and that happens by continuing to treat every single patron graciously, ensuring they enjoy great food underpinned by great value so they are likely to return," Mr Chew says.

McThai plans to spend 5 billion baht to expand the business over the next five years. This year the company plans to spend up to 1.1 billion baht to open 20-25 McDonald's restaurants and upgrade IT infrastructure.

Consumer concerns have led the company to adopt the "Think Global, Act Local" strategy, Mr Chew says. McThai set a five-year vision (2015-20) to inspire its employees and provide a great place to work.

The company aims to be the "QSR of choice" by growing profitably and responsibly in the community, expanding to 350 restaurants.

"I work six-and-a-half days a week," Mr Chew says with a smile. He still sees tremendous growth opportunities in Thailand.

Singapore has 130 McDonald's branches with a population of only 5 million, and Malaysia has 280 branches and a population of 30 million. Doing the math, Mr Chew says Thai expansion opportunities abound.

"One day, we will expand the number of stores here to reach 500," he says.

___

(c)2017 the Bangkok Post (Bangkok, Thailand)

Visit the Bangkok Post (Bangkok, Thailand) at www.bangkokpost.com

Distributed by Tribune Content Agency, LLC.

© Tribune Content Agency, source Regional News

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Financials ($)
Sales 2018 21 056 M
EBIT 2018 9 065 M
Net income 2018 5 985 M
Debt 2018 28 336 M
Yield 2018 2,58%
P/E ratio 2018 20,99
P/E ratio 2019 19,34
EV / Sales 2018 7,35x
EV / Sales 2019 7,46x
Capitalization 126 B
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McDonald's Corporation Technical Analysis Chart | MCD | US5801351017 | 4-Traders
Technical analysis trends MCDONALD'S CORPORATION
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Mean consensus OUTPERFORM
Number of Analysts 35
Average target price 190 $
Spread / Average Target 20%
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Managers
NameTitle
Stephen J. Easterbrook President, Chief Executive Officer & Director
Enrique Hernandez Non-Executive Chairman
James R. Sappington Executive VP-Operations & Technology Systems
Kevin M. Ozan Chief Financial Officer & Executive Vice President
Andrew J. McKenna Chairman-Emeritus
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