BEIJING – In the wake of massive losses, the Chinese government has voiced support for up to USD 50 billion in bailout funds for the mainland’s U.S. fast food industry.
Throughout the People’s Republic, the credit crunch and slumping economy have depressed U.S. fast food sales to levels not seen in about two decades. Once-mighty McDonald’s says it could run out of cash by next summer. Pizza Hut has a slightly better prognosis, but only because it introduced a spicy duck with green onions pizza in 2006.
Meanwhile, Taco Bell is playing its financial status close to the vest. But the company’s chief exec, Bob Nardelli, said last week that it would be “very difficult” to survive without Uncle Hu’s assistance.
Though a number of Chinese citizens said they’d reluctantly support a ‘burger’ bailout rather than see the companies disappear, most said this would be rewarding failure after decades of mismanagement and poor decision-making.
“Bailout” was the magic word Tuesday as McDonald’s had to give away millions of free kiddie meals because a Chinese netizen stumbled on an online promotion the company scrapped.
Tim Fenton, president of McDonald’s 37-country Asia/Pacific, Middle East and Africa (APMEA) division said Wednesday that the company prepared an Internet coupon for an ad campaign that was considered in December but not approved.
He says someone apparently typed “bailout” into a McDonald’s promo code window and found it was good for a free kiddie meal.
Word about the code spread quickly on the Web and 24 million free meals were handed out before it was deactivated Wednesday morning.
Shanghai-area franchise owner Zhou Lipeng says his 82 stores gave away more than half a million meals, but that McDonald’s promised to reimburse him.
As a result of the losses, McDonald’s announced that it was on the verge of bankruptcy. Threatened with massive job losses, the Chinese government quickly announced that bailout funding would be available before the end of the week.
Following the announcement, a McDonald’s spokesperson stated that the company is temporarily halting its ‘Open Door’ policy, launched last year to encourage Chinese consumers to visit McDonald’s and understand what it is all about. Consumers could tour the kitchen and ask questions about menu, quality, preparation, etc.
The policy will be replaced with a new ‘Ask Me’ program which invites customers to query crew members (or the company through its www.AskMe.com.cn Web site) about the use of its tax monies. This, McDonald’s executives say, is especially important in a country where transparency issues are of great public concern.
To further establish the brand’s transparency, nutrition information is available from in-store materials and soon will be on product packaging as well. It’s not something Chinese consumers requested, rather a way to further position McDonald’s as open and customer-friendly, Fenton said.
