"Advertising is not a silver bullet, but it is a catalyst to drive the brand," notes a confidential internal report, a copy of which was obtained by Advertising Age.
The document sums up a recent national franchisee board meeting and also declares that "Marketing makes the promise. Owner/Operators deliver on it."
The report addresses McDonald's commitment to long-term promotional partner Walt Disney Co. and discloses the fast-food chain may end its sponsorship of the National Football League.
ADVICE TO FRANCHISEES
While addressing those marketing issues, it also goes on to call for the franchisee board to "focus on its expertise," including improving drive-through service and enhancing the restaurants, staffing and in-store service.
McDonald's did not return calls by press time.
Part of the memo's message was echoed publicly in McDonald's third-quarter earnings announcement, issued Oct. 17, in which U.S. division CEO Jack Greenberg said "sales results have been mixed throughout the year" and that he is "cautious about our ability to continue this momentum for the fourth quarter." McDonald's said U.S. operating income fell 2% in the third quarter and was flat for the first nine months of the year, compared with year-earlier figures. Overall, McDonald's reported net income of $449 million, up 1.9% for the third quarter as compared with the previous year.
FIRST DDB NEEDHAM EFFORT
The new national ad campaign, tagged, "Did somebody say McDonald's?" began during the first week of the fourth quarter, on Oct. 3. The campaign is the first from DDB Needham Worldwide, New York, since it wrested the creative account from Leo Burnett USA last July.
Last week, McDonald's shifted adult media buying as expected from Burnett to DDB Needham, which will handle the business from its New York office.
While no spending figure was released, McDonald's spent $600 million in measured media last year, according to Competitive Media Reporting. Adult media buying is said to account for at least $350 million of that.
During the last two years, franchisees have placed a large part of the blame for the company's flagging U.S. sales on marketing. Efforts such as last year's launch of the Arch Deluxe burger and this year's Campaign 55 promotion were widely viewed as flops.
QUESTIONS FROM FRANCHISEES
The McDonald's report indicates franchisees also are questioning a number of other corporate marketing decisions, ranging from McDonald's 10-year tie-in with Walt Disney Co. to the likely ending of its NFL sponsorship.
The company is now saying that franchisees-who own some 85% of the chain's 12,000 domestic units-have a part to play in reviving the business.
The document outlines the vision of Brad Ball, senior-VP marketing, "to create the best system plan that is fueled by optimism, [franchisee participation] and a mutual understanding and acceptance of each other's role."
Franchisees are concerned about losing the NFL tie-in, now in its fifth and final year. But that won't preclude McDonald's from linking with local football franchises, or from buying advertising during NFL games, the report notes.
The NFL wouldn't comment on negotiations, only that it was looking at a variety of options and that it was working with NFL owners on pursuing the best strategy.
Franchisees also wanted to know if McDonald's will be more prominently featured in Disney projects. The company said franchisees will "see progress," noting McDonald's is now featured in posters for "Toy Story."
For the upcoming promotion with Disney's "Flubber," there will be a french fry promotion via movie theaters, the company told the franchisee board.
Allan Hickok, a restaurant analyst with Piper Jaffray, Minneapolis, said if McDonald's "doesn't put the gas on promotions and 99 cents items, there's an opportunity for its sales to continue to be very soft."
In separate McDonald's news, the company has tapped Larry Zwain, former president-CEO of Boston Market, as a VP. Mr. Zwain is a veteran of PepsiCo's recently spun off restaurant chains.
He served from 1994 to 1996 as president-CEO of PepsiCo Restaurants International. In late August, he resigned as vice chairman of Boston Chicken, Boston Market's parent.