Future Demands for Supplying Food Retailers

Delegates to the IEC London Meeting 2009 heard from one of the most successful restaurant chains in the world, McDonald's. Dean McKenna highlighted that the key to successful retail is providing the product that the consumer wants.

28 June 2009

5 minute read

Dean McKenna is Division Supply Chain Lead for McDonald's. He has responsibility for all purchasing, distribution and food quality throughout McDonald's Northern Division. Mr McKenna addressed the IEC London Conference, giving delegates valuable information about how McDonald's, one of the world's largest food retailers, successfully manages consumer demand.

While addressing over 200 representatives from the global egg industry, he also took the opportunity to urge the industry to act and take control of the legislations being enforced on it.

Know What Your Customer Wants and Make Sure You Supply It

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"A retailer must understand what is important to its customers, know what its customers want, and make sure it supplies it."

Mr McKenna used the UK market as the foundation of his presentation, because, as he explained, McDonald's sees "the UK as the trend setter for where other markets will be heading in the future".

McDonald's Restaurants uses approximately 2.4 billion eggs each year, these are used predominantly in its breakfast menus. In addition to these, it also uses eggs in its range of sauces, cakes and meat coatings. Eleven years ago, McDonald's made the decision to use only free-range eggs in its UK products and uses around 81 million free-range eggs every year to supply the UK market.

Mr McKenna explained that McDonald's decision to only use free-range eggs was two fold: it was partly based on the increase in consumer awareness of free-range and animal welfare issues but it was also based on the fact that McDonald's anticipated how these public concerns would affect customers' buying decisions in the future.

He stated: "Making this move ahead of the market gave us first mover advantage in a sector that has already seen fast paced growth and is still growing, even during a recession."

The message that Mr McKenna emphasised to the IEC audience is that the key to being successful in retail is that a retailer must understand what is important to its customers, know what its customers want, and make sure it supplies it.

Egg Industry Needs to Represent Itself

Dean McKenna spoke during the same conference session as Gene Gregory. Although McDonald's policy in the UK is to only use free-range eggs, and Gene Gregory represents a large cage industry, both men spoke about the lack of egg industry representation, and agreed that non-governmental organisations (NGOs) are now setting the agenda as far as animal welfare is concerned.

Mr McKenna told delegates: "I don't believe you, as an industry, should be happy or satisfied to allow NGOs to set your agenda or standards."

Need for Global Egg Standards

He also believes that the lack of industry regulations as to what constitutes "free range" allows some businesses to use the term to mislead customers, implying that the egg has been produced more humanely than it actually has been, and that this in turn, leads to consumer confusion and mistrust.

"I would like to see a globally relevant set of standards as far as hen welfare is concerned in the near future", Mr McKenna explained. "This would eliminate this sense of buyer confusion and prevent certification schemes from misleading consumers by suggesting that they offer higher welfare standards than is in fact the case."

Until the egg industry can take control and influence consumer opinion, retailers, like McDonald's believe that they will be forced to continue to follow the lead set by animal welfare NGOs, as this is the lead the consumer is choosing to follow.

Understanding Consumer Trends

The current trend of the consumer is to show interest in their food choice, such as where it is sourced from, how it is produced, what is in it and whether it is good for them. This is still true, despite the current financial crisis. Animal welfare is a relatively new concern of the consumer, but for many it will determine whether they or not they purchase a product, so in order to continue to be successful McDonald's must recognise and respond to this.

McDonald's believes that by responding to these consumer trends and demands, it is able to meet its customers' expectations and continue to be a huge success in the retail food market.