Lessons For Sustainable Growth

I had the delight of my colleague Jemma (Redii GM) sharing with me her insights from the former CEO of McDonalds Australia, Peter Ritchie, who started back in 1973 as McDonald’s Australia’s first ever employee and the first employee outside of North America. He shared with us a long journey (32 years with the brand) and the lessons for sustainable growth he learned along the way.

She tells me he had a wonderful and very simple story about the growth of the brand in Australia and how investing in people was key to their success. He shared his three key lessons.

When Peter chose to bring McDonald’s to Australia, he had no idea how it was going to go. He had backing from the US Chairman at the time in 1973, but it took him 7 years of losses before McDonald’s Australia started turning a profit and were accepted as a brand.

Very early in his career, Peter learned his first and most valuable lesson in business;

1. “There ain’t no such thing as instant success.”

Pressured from the US executive teams he, on many occasions, wanted to give up. But, he built a great relationship with the chairman at the time, who told him that it would take the American operation more time to turn a profit – something not widely discussed before that stage.

In 1985 the Australian McDonald’s chain was starting to show signs of potential but still nowhere near where it needed to be.

They have a measure that at any time in any McDonald’s store globally, they can compare the number of customers served directly to the number of staff rostered on in the store. Australia at this time ranked in the bottom 5% for productivity.

After a trip with his team to investigate the best of the global McDonald’s operations, Peter realised that the Australian stores could never compete at the same level as the efficiency of stores in Asia, where the labour was more accessible, cheaper and they had three staff on the restaurant floor to Australia’s one.

So in 1986, he made the decision to invest 30% of the company net profit into training.

The results were dramatic.

In 1987 Australia went from being ranked in the bottom 5% to being #1 in the world on the customers served to staff ratio. And it still is to this day.

Not only did productivity increase, but the profitability went up dramatically. He believes they are still in this position because he created a culture of training which leads to his second most valuable lesson;

2. “Training is absolutely vital in any organisation”.

His third lesson was about how training can really turn people into leaders. He has watched plenty of fresh-faced 15-year-olds go through the McDonald’s training program.

He’s watched them grow in confidence and trust in their own abilities. Peter believes that “you can absolutely learn to be a leader” and that “if you think you are a good leader now, have another think and ask yourself, ‘what is being a leader really about? What do people think of me and what do people expect from me?’”

3. “You can absolutely learn to be a leader”

It’s a simple set of lessons from a former CEO who’s seen a few things in his time. I appreciate your insights Jemma.

I found this story fascinating – especially the absolute commitment to the team. When McDonald’s came to Australia I was a child – one of the first restaurants was not far from our home in Nunawading. My sister and I wanted our parents to take us there. It is hard to believe now, but these fast food restaurants had to convince Australians (over a long period of time) to change eating habits. The only option for a cheap meal we had had until this was the local fish and chip shop.

If McDonald’s had not have arrived, then I suppose some one else would have created this mid-market.