Friday, 30 January 2015

Weekly Wrap Up: McDonald’s turnaround

To say that the world’s most famous fast food chain, McDonald’s, is in financial trouble might seem a gross exaggeration. However the US giant is certainly in an unfamiliar and uncomfortable position. In 2014, the Company recorded its first annual decline in global same-store sales in a dozen years.

The tip of the iceberg (lettuce) is their most recent announcement stating that British Steve Easterbrook will replace current Chief Executive, Don Thompson in March. The Brit will have to find a way to turn around one of the biggest challenges the $87bn company has faced in its 60-year history.

During the recession, the company profited from customer demand to eat cheaply, as well as staff that were happy to put up with low wages, simply glad to have a job. A couple of years later however, America witnessed strikes by its lowest-paid workers, which included Mcdonald’s. Due to the Company’s global status, it was one of the most targeted by the media. And because of their initial refusal to increase wages, they were also one of the worst affected. It angered some regular customers, who took their money elsewhere. This, along with a failed PR twitter campaign in 2012, ‘Tell us what you think of us’, begins to answer another question – why are McDonald’s struggling?

In recent years, Mcdonald’s has found more and more competitors encroaching on their turf. In addition, the shape of the market is changing. Consumers are no longer interested in food that is just fast – amongst other things, they want healthy, fresh and natural. The consumer is willing to pay more, changing ‘fast food’ into what is becoming known as ‘fast-casual’ food.

McDonald’s are falling behind competitors in an overcrowded market. However, the company has introduced campaigns over the years promoting fresh produce or healthy salads. And they are currently running a transparency campaign to give more insight into how their food is made and what goes into it. Predictably, this has brought even more negative press, as the horror of what goes into their food has been revealed.

It seems that McDonald’s should delve deeper into their brand positioning to redefine their 60-year old reputation. As the Company’s former Chief Brand Officer in charge of marketing and menu innovation, Easterbrook seems perfectly tooled to take on this challenge. Perhaps cleaner processes, less junk and better quality ingredients will finally be on the menu. Single figure ingredients for their fries would be a start.

This week, Abchaps welcomed London and West Country Lawyers Thrings to our Sky Bar to exchange our shared areas of expertise. We also hosted a Market Lunch where the outlook and opportunities of AIM was discussed.

Panmure Gordon made two appointments to its research team: Jonathan Leinster as consumer analyst from UBS and Mike Stewart, formerly of Shore Capital, as retail analyst. Erik Anderson, previously of Investec, is joining its corporate broking team. Meanwhile, at Hamlins, Charles Bezzant has been appointed as partner, and he joins from Reed Smith.

"Fast-casual": A fast-casual restaurant is a type of restaurant that does not offer full table service, but promises a higher quality of food with fewer frozen or processed ingredients than a fast-food restaurant.

This weekend, see the inside of one of London’s most iconic film sets. Aldwych tube station has been used in Atonement, V for Vendetta, and Bond, and this weekend is being opened by the London Transport Museum for a rare insight into London’s past.

From underground to up in the air, London is currently playing host to the inimitable Cirque du Soleil, with their new show, Kooza, tickets are still available, but they’re going fast.

Finally, as only Shoreditch can, Floripa is holding a carnival brunch from 12pm – 6pm, promising beach burgers, samba, and potentially some margharita’s!

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Friday, 23 January 2015

Weekly Wrap Up: Hostile takeover of an iconic recipe

When Cadbury was acquired by Kraft Foods a few years ago, many British chocolate lovers immediately feared the worst: the American company would tinker with the recipes of their beloved treats.

Well this month that nightmare became a reality.

It all began with reports that a new batch of Creme Eggs “tasted different”. So in an instance of sound investigative journalism, The Sun newspaper contacted the company, whose name has been changed to Mondelez International since the takeover.

A Mondelez spokesperson confirmed the worst. The Creme Egg recipe has indeed been altered, meaning the iconic Easter egg will no longer be made with Dairy Milk chocolate. The shell will now be made of a standard cocoa mix chocolate.

What unfolded next was nothing short of a PR disaster. Online outrage and calls for a boycott of Creme Eggs and Cadbury were followed by a slew of negative press coverage. One man from Liverpool was so angry he started a petition demanding that Mondolez change the recipe back.

Clearly, there is such a thing as bad publicity. City A.M. pointed out this week that the YouGov Brand Index Buzz score, which indicates if a respondent has heard something very positive or negative about a company, has plummeted since the revelation. The purchase consideration metric, which shows whether a respondent would buy an item, also dropped after the change in recipe was announced.

This whole mishap could easily have been prevented. It seems Mondelez failed to have an adequate PR plan in place. Also, they only confessed that they had meddled with the recipe once confronted by The Sun. There was almost certainly a better way to deliver the bad news. Perhaps Mondelez should have picked up on the anger and resentment that arose when an American company took over this beloved UK brand. If the company had done more to understand that to the British consumer the Creme Egg is iconic, maybe they would have realised they probably shouldn’t ‘Americanise’ the recipe. In that respect, the way to avoid all this bad publicity is actually quite simple: don’t change a recipe that has served the company extremely well for over 50 years. Or, to put it in more American terms: if it ain’t broke, don’t fix it.

Zeus Capital announced three appointments: Nick How has arrived from Oriel Securities as corporate finance director; Hugo Chance joins as director and head of family offices having previously headed up the angel investor forum Angels and Equity under Truestone Group; and Claire Frangou joins from Deloitte as business development director. Meanwhile, PwC appointed Naomi Saragoussi, previously of Mercer, to develop its private healthcare and group protection advisory business.

Americanisation: The influence the United States has on other cultures. It’s a term often considered to be synonymous with progress and innovation, although British consumers of Cadbury’s Creme Eggs might disagree

Felt the toll of the worst week of the year (it’s a scientific fact…)? Well try to escape blue Monday with the LOCO London Comedy Film Festival – based at the BFI on the Southbank. With every genre of comedy covered, from Ealing classics to brand new British films, LOCO’s mission is to kickstart the next generation of British comedy film-writers, why not try out the world premiere Lost in Karastan?

If film’s your thing but you fancy something more cerebral, why not try BAFTA, Backstage, the latest photographic exhibition from the BAFTA archive. With an exclusive insight into the backstage workings of Britain’s most impressive film event of the year, see candid shots of such disparate stars as Annette Bening, Brad Pitt, and Gugu Mbatha-Raw. As an opportunity to see behind the film industry’s visage, this is not one to be missed.

Or, if you like nothing more than a wander to your local on a weekend, why not try wandering to someone else’s? Random London Walk’s, a tour which plays out by luck and chance more than judgement, have offered a Pub Special for this weekend. With where you go completely put in the hands of fate, you pick a card, and it tells you where you’re going. With a starting point near Covent Garden, this tour is for those who are confident they can get themselves home after a night out, where ever they end up!

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Friday, 16 January 2015

Weekly Wrap Up: The Great Firewall of China

Will economic ambitions force Beijing to liberalise internet policy?

In the build-up to the unveiling of China’s answer to Apple, Xiaomi’s new smartphone this week, a source leaked to Reuters that they had previously been approached by Facebook CEO Mark Zuckerberg about a possible investment, but that the deal fell through.

The meeting between Zuckerberg and Xiaomi CEO Lei Jun came ahead of the smartphone maker’s $1.1 billion fundraising last month. That brought the company’s valuation to $45 billion, making Xiaomi the world’s most valuable start-up just four years after being founded. In fact, Xiaomi now comes in just behind Samsung and Apple in sales, meaning it is one of the top three smartphone makers in the world. So it’s pretty obvious why Zuckerberg was eager to go into business with Xiaomi.

Why, then, did the talks fail? It was said that part of the reason Lei turned down the offer was due to the potential political fallout of selling a stake in his company to Facebook. The U.S. social network is banned in China. It’s all part of a bigger effort by the Chinese government, which is afraid of the impact of a free internet. This has led to the implementation of all sorts of controls, dubbed the ‘Great Firewall of China’, and the blacklisting of a number of popular social media sites. In 2009, Facebook was added to that list.

Facebook is hardly alone in this regard. A more recent example came at the end of 2014 when Google’s Gmail was blocked. There was a huge outcry, including complaints from business travellers who could no longer access their email. Their Chinese counterparts were also frustrated with the increasing difficulty of conducting business internationally.

Both the failed Facebook/Xiaomi deal and the Gmail ban highlight the difficulty that international companies can face when investing in China. It is essential that any PR strategy takes into account that many means of communication are banned. Words must be carefully chosen because both domestic and international companies can have their online presence shut down completely if they violate the ban.

It is a delicate balancing act. Consider the example of Yahoo!, which decided to comply with China’s restrictions. Yahoo! then came under fire in the U.S. and found themselves defending their decision to Congress. The Company then had to admit that that it could not protect the privacy of its Chinese customers from authorities. One customer whose identity was turned over to authorities was sentenced to 10 years in prison. Obviously, when this news leaked it resulted in plenty of bad press for Yahoo! outside of China. 

The internet ban is certainly something to consider for any company wanting to do business in China. Ultimately, the economic implications of this firewall could be a far greater threat to sentiments amongst citizens than any online communications would have been. In order to facilitate cross-border investments, it is vital for the CCP to revise its media policy. For a little advice, Communist Party leaders might want to Google the phrase, “it’s the economy, stupid.” Oh wait. They can’t.

This week Abchaps hosted a market lunch with a focus on Asia. The group discussed the market sentiment and how Asia-based companies are developing in the London market in order to gauge future investor interest. Abchaps also celebrated David Brennan’s recent promotion at Gowlings to celebrate his. We congratulate him again on reaching Partner at the firm.

Charles Stanley appointed Peter Geikie-Cobb, formerly at F&C to head its Matterley business, with a new bond fund to be provided. Meanwhile, Ian Williams, previously at SGH Martineau,joined Baker Tilly as the International Lead for its Restructuring and Recovery service line. Eric Pang joined JLL to lead its UK markets group China desk.

“Great Firewall of China”- a term to describe Internet Censorship in China under a variety of laws, administrative regulations, and execution effort

Celebrate having Scotland as part of the UK tonight by attending the Ceilidh Club Burns Night – London’s biggest Burns Night event. With three hours of energetic ceilidh dancing and a buffet dinner of traditional Scottish haggis, neeps and tatties, it is a great way to socialise, exercise and have a laugh with friends!

If you are around Greenwich over the weekend or next week pop into the Royal Observatory which hosts the Astronomy Photographer of the Year competition. The free exhibition showcases remarkable feats of astrophotography entered into four categories: ‘Earth and Space’, ‘Our Solar System’, ‘Deep Space’ and ‘Young Astronomy Photographer of the Year’ for under-16s.

Take the opportunity over the weekend to visit The Nation Gallery’s exhibition which has become one of London’s biggest attractions since opening last week. ‘Rembrandt: the Late Works’ shows just four self-portrait canvases and a tiny etching by Rembrandt Harmenszoon van Rijn, all made during the last 11 years of his life. This may not sound like a great deal but tell that to the queues outside the National Gallery!

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