McDonald's is branching out. Not content with simply shifting burgers and fries to the bloated masses, the fast-food empire now wants to sell us Mc-branded clothes, as well as McKids toys, books, videos and DVDs. McKids clothing has just gone on sale in more than a dozen department stores in China. Distribution will be extended into Taiwan and Korea in the next few months. The clothes will arrive in Western Europe and the US in 2005.
Amy Moynihan, the director of global brand marketing at McDonald's HQ in Oak Brook, Illinois, is adamant that this is no cynical marketing ploy. McDonald's has long lent its name to a variety of third-party-produced merchandise, she argues - this is simply a way of formalising this activity and enabling McDonald's to have greater control over the way its brand is used.
"McKids is a new, active lifestyle brand from McDonald's which extends the fun of the brand outside the restaurants. It's all about fun and meaningful learning experiences for kids," Moynihan declares. "Is it just about promoting burgers? Yes and no. It's not really about subtle or more sophisticated marketing in that sense. McKids clothes are neither character or logo-driven - they're about comfort, durability and the quality and value parents expect from McDonald's. But it is about unifying our activities under a single brand name, and taking better control over our brand."
In branding terms, therefore, McDonald's is all about fun for kids, quality and value for parents. And it is these brand values that the company now wants to better exploit; official statements made by the company have repeatedly stressed its efforts to "revitalise" the business. And not before time. While McDonald's remains the world's leading food service retailer, with more than 30,000 outlets serving 47 million customers each day, the business of mass-selling burgers and fries has never been tougher.
Small wonder, then, that critics smell the whiff of subterfuge. Most dismiss the plans as an attempt to flog more McDonald's burgers and fries through the back door.
"One can only be highly cynical of the motive behind this. It's a way of side-stepping the hoo-ha about advertising to kids," says Dr David Haslam, chair of the UK lobby group, the National Obesity Forum.
Others go even further. According to Marian Salzman, executive vice-president of the global advertising agency Euro RSCG, and author of Globesity, a report published last year on the implications of our ever-expanding waistlines: "McKids is the first acknowledgement that fatty food is becoming the new tobacco."
Indeed, this sort of brand diversification is exactly what the likes of Philip Morris and RJ Reynolds Tobacco began doing in the face of an impending ban on tobacco advertising, 15 years ago. Dubbed "dark marketing", it's a strategy designed to side-step industry regulations, and typically involves two tactics.
The first is brand diversification. Marlboro cigarettes circumnavigated their problems by marketing a range of clothing. The Marlboro Classics range is now a highly profitable business in its own right, and boasts an annual turnover of more than $250m.
The second tactic is called "alibi" branding, which involves distilling a brand identity into its key components. Marlboro uses its distinctive red and white colouring in Formula One sponsorship. Silk Cut has become synonymous with a particular shade of purple.
"There's a history of brands diversifying into lifestyle areas. But if you are doing so in an environment where you can no longer advertise to create desire, that's very different," Salzman says. "If kids can go to school wearing McDonald's, who cares whether it's OK for brands to advertise on text books or have vending machines selling their products in schools?"
Whether they openly admit it or not, the reason for rolling out McKids is to create another, McDonald's-controlled, way of reaching consumers in the face of restrictive marketing legislation. "The McDonald's golden arches logo is robust enough not to need the word "McDonald's" alongside it for it to be instantly recognisable," says a UK marketing consultant who has worked closely with the company in recent years. "And if turnover and revenue from McDonald's restaurants is shrinking, then exploiting the brand in other ways could well bolster the company's financial performance."
Clever food and drinks brands are already finding new ways of appealing to children, he adds. Already we've seen the arrival of foods that aren't just functional, but also have play value, such as Heinz's green ketchup. A growing number of major food and drinks companies, meanwhile, are diversifying away from their core products. Coca-Cola moved into fruit juices, and last month launched the ill-fated Dasani water.
Over the 14 months since the food chain first published falling profits, McDonald's has worked hard to get its house in order - overhauling its menus, promoting healthier options, such as salads and fresh fruit, and cutting salt levels. It has also ended super-sizing. Meanwhile, it has unveiled its first-ever global advertising strategy, the hip-hop-inspired "I'm Lovin' It" theme fronted by Justin Timberlake.
The net effect of all this is that McDonald's is now back in the black. But it must still adjust to the fact that it is seen by many as one of the chief causes of the fat epidemic. Meanwhile, the obesity debate in the UK is increasingly focused on advertising to children. Last month, the UK Food Standards Agency recommended further restrictions to the Government, in advance of a White Paper on obesity and food promotion due to be published in June.
"When the business of serving up hamburgers is perceived as deeply suspect among the chattering classes, then you have a problem," says Peter York, the author and commentator on social change. He believes McDonald's is behaving like a company in panic: "In the war of words, McDonald's is losing out every where, in every way."
Strange, then, that it should choose now to unveil McKids.
"It does seem surprising timing given the flak they're under," says Leslie Butterfield, managing partner of the strategic brand consultancy The Ingram Partnership. "And, beyond that, I would ask: is this sensible diversification? Usually companies seek a sensible evolution rather than jumping miles ahead. I'm not sure of the connection between making burgers and making jeans."
Health campaigners are similarly dubious. "What I'd rather see them focusing on is food content - that's what really matters. We have seen some improvement from McDonald's in that respect, but there is still much more work to be done," Dr Haslam says. Salzman, though, says McKids may ultimately prove to be "canny".
"Increasingly, McDonald's only makes shrewd moves: it has done very well by having its ear to the ground," she says. "McKids is likely to play on pester power - especially if a parent decides buying the outfit isn't as bad as watching their child eat the chips. Grandparents will buy it if they think it's cute. Then there's the kids' party factor - you can never control what other parents will buy your child."
A further endorsement comes from an unlikely source: healthy eating campaigner Tim Lang, professor of food policy at City University. "This is a company under attack wanting to extract value from the brand in other ways. The public health movement should take heart from this: it shows we've got more impact and power than we think we have. Because they've shaved costs so much, they rely heavily on fast through-flow of consumers, so when anything rocks them they're extremely vulnerable.
"Roll on the day when McDonald's no longer sells fatty foods at all."Reuse content