Financial Adviser: 5 Business Lessons Everyone Can Learn from McDonald's Philippines Chief Kenneth Yang

The president and CEO of McDonald’s PH speaks.
ILLUSTRATOR WARREN ESPEJO

Kenneth Yang got his first exposure in McDonald’s when he attended training with his father, George Yang, in Hong Kong. The senior Yang went there on his own initiative without the assurance of getting the franchise from the US.

Yang, who was only 15 years old then, saw how his father fought so hard to bring McDonald’s to the Philippines so that when his father finally won the franchise to operate the world’s largest fast-food chain, he immediately volunteered to work as part-time crew in one of their first branches.

Yang was already working with his father while he was still studying in college. When he finally graduated, he decided to work full-time as an entry-level branch management trainee, which led him to eventually become a store manager.

Soon, as his experience grew, he applied for work in the purchasing department before moving into quality assurance and business development, where he handled site selection and real estate acquisitions.

Unlike the typical family business, McDonald’s PH was organized to be a professionally managed organization using systems patterned after best practices from the US.

Yang had to work his way through the company by reporting to different managers in the organization to earn his promotion in the corporate ladder.

In 2003, 22 years after McDonald’s Philippines was founded, Yang took over the company as president and CEO. At the time he assumed office, the number of McDonald’s outlets was less than 250.

Today, the number of McDonald’s outlets in the country has more than doubled to over 670 branches, making it one of the leading fast-food chains in the country.

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How did Yang manage McDonald’s PH to stay relevant amidst rising competition in the industry? Here are the five business lessons every entrepreneur can learn from McDonald’s Philippines CEO Kenneth Yang:

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1| Create a customer-focused culture to beat competition

In a competitive market like the fast-food industry, customer satisfaction is a key differentiator. Customers can easily switch to competitors if they are not satisfied with your products and services.

Focusing on providing better service and quality goods with increasing customer loyalty in mind can help the business stand out from the competition in the long-term.

“Competition is inevitable,” Yang says. “There is a lot of competition out there, not just in the quick service restaurant market, but also from convenience stores. We accept that the competition is there and we try to compete by giving our best to the customers through value pricing, quality products and a comfortable store environment.

“We try not to be distracted by competition,” he adds. “It is not the right thing to do to just focus on competition without thinking about the customer. Our main focus is on the customer and we grow accordingly when there is opportunity.”

2| Create innovative products and services to stay relevant

Finding better ways to do traditional practices does not only help a business become more competitive but also help develop new markets that can lead to bigger opportunities.

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“A lot of innovation will come from understanding your customer and seeing their lifestyle change,” Yang says. “Before, it was the drive-thru but because of lifestyle changes, deliveries have become very important. McDelivery contributes a big portion of our revenues now.

“Another innovation we made was the 24-hour store,” he adds. “At that time, the Philippines was just starting the BPO industry, but today, we made almost all our stores 24 hours.

“In innovation, you have to look at it holistically. Sometimes when you compartmentalize the business, you may find it unprofitable. You have to look at the overall benefit to it. Maybe in the beginning, you have to build the market. You may also need to invest in order to develop the market.”

3| Create effective marketing to win the millennial market

Millennials are different because they grew up with technology and social media. They are attached to their smartphones and value authentic marketing. Understanding what millennials want is key to capturing this active market.

“Communicating with the millennials is very important through social media, digital marketing, digital commerce and, later, maybe the digital experience also,” Yang says. “That is important to us because the customers today are different. So even in McDelivery, they can order through app, through mobile, through the website and in the future, that will also happen in the restaurant.

“You will see that our restaurants are more modern and contemporary,” he adds. “You have to modernize some aspects of our stores such as the design, lighting, seating and even the music. We are doing it in all outlets.”

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4| Create value-added training courses to boost productivity

Investing in training is critical in driving productivity in the business because well-trained employees will not only work competently but also be happier at work.

Providing training to employees is more than just sending staff and managers to a weekend course. It’s about customizing the training to both the needs of the business and employees.

“If you invest in your people they will do a great job for you,” Yang says. “You invest in them with the right skills and the right mindset and, in turn, they will also deliver to meet the needs of the customer. McDonald’s in the Philippines today—together with our franchisees—we have about 60,000 people and training is a key critical need.

“One of the things we are very proud of with our training of managers is they can actually qualify to get a diploma from Lyceum when they finish their modules,” he adds. “We have a lot of managers who never went to college but they dream to get a diploma. They are awarded with diplomas based on their experience with McDonald’s because our training is accredited." 

5| Create diversity in product lines to make it more accessible to the local market

Every market has its own culture and peculiarities. Adapting the business to the local market helps in customizing the right value proposition and improving overall customer satisfaction.

Companies that localize their products and services tend to see improvements in consumer engagement, increasing their revenues and customer base.

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“Filipinos are very value-conscious and purchasing power is not that high so we have to create products that fit the local taste and are affordable,” Yang says. “We offer McDonald’s global products like the hamburger, cheeseburger and McNuggets which comprise our core menu, but we also offer local favorites such as Chicken Mcdo, which we made better a few years ago, and Chicken Fillet, which is our value priced product.

“Recently, we introduced a new beverage called McFreeze, which is a beverage that comes with different flavors,” he adds. “We also offer many occasional promotional products, whether its rice-based, or sandwich or desserts. We are allowed to innovate our own products for the local market and make sure that we deliver to the standard of McDonald’s for safety and quality.”

Henry Ong, RFP, is an entrepreneur, financial planning advocate and business advisor. Email Henry for business advice [email protected] or follow him on Twitter @henryong888 

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