Fast Food Geography

November 2012

Vegetarian McDonald’s outlets are being developed in Amritsar, home to the Golden Temple, the holiest site of India’s minority Sikh faith, and in the town of Katra, the base for Hindus visiting the mountain shrine of Vaishno Devi, the second busiest pilgrimage spot in India.

Abandoning meat altogether is a significant step for this transnational corporation (TNC) to take, given that its brand is intimately linked with beefy ‘hamburger’ sales. In addition, as part of a joint venture within India, McDonald’s has also agreed to share its profits in India with local firms.

This article explores the lengths TNCs are prepared to go to in order to access new markets and how they adapt and change their business in order to achieve this. These localised changes – sometimes called ‘glocalisation’ – can result in quite radical changes being made in the way goods and products are provided for local markets. We also investigate some places where McDonald’s has closed down its stores, rather than opening new ones. All of which leads us to ask: does globalisation really lead to a loss of local cultural diversity, as some critics suggest, if interesting and complex changes in the geography of consumption are taking place at the local scale?

 

Globalisation, glocalisation and cultural diversity

Is the global spread of TNCs and their branded goods really leading to a planet-wide loss of cultural diversity? Or are outcomes actually more complex, particularly as TNCs often adapt their products and foods to the tastes and preferences of different local markets?

Transnational Corporations are important players who help bring about globalisation by creating cross-border economic linkages between nations on a global scale. McDonald’s, for instance, sources products like beef and salad ingredients from many different places all across the world. It also strives to sell its food to as many markets as possible, using a range of strategies to maximise chances of success (Financial Times, 04 September 2012). Two important methods for geographers to be aware of are glocalisation and joint ventures.

When TNCs customise their products for sale in local markets, in an attempt to boost sales and profits, the practice is called glocalisation. This strategy has developed over time, starting with the local sourcing of parts by TNCs when establishing their first branch plants overseas (using components from local suppliers reduces transport and import tariff costs; also, with food products it means ingredients are fresh). Providing local suppliers with a new market can lead to TNCs being seen as a valued part of the local business community.

The use of local ingredients sometimes brings a change in taste for food and drink products. In South Africa, beer is often brewed by TNCs using locally-grown cassava or sorghum rather than grains like barley (that are used in brewing in Europe). Diageo (the maker of Guinness) and SABMiller quickly recognised that local South African customers actually prefer the taste when cassava is used. In fact, it is now ‘common sense’ for large TNCs to customise their products to meet indigenous tastes in order to increase their chances of success when entering local markets around the globe.

Glocalisation is sometimes the outcome of a political requirement for TNCs to work closely with local businesses. Some countries like India insist that TNCs work in partnership, through joint ventures, with indigenous firms. McDonald’s restaurants there are run as joint ventures with local Indian companies who re-design the menu in partnership with the TNC to take account of local tastes and customs. The profits are also shared by the partnership.

Geographer Peter Jackson has written about glocalisation as ‘local consumptions in a globalizing world’. In Transactions of the Institute of British Geographers, he wrote in 2004: ‘For all the corporate energy that has gone into creating a single global message and despite the increasing transnational flow of people, money and artefacts, cultural homogenisation is still far from being achieved. Rather than rolling their existing products across a geographically undifferentiated market, producers have had to adapt their global brands to a variety of local conditions. Paradoxically, then, globalisation has itself required companies to adopt a variety of localizing strategies in order to succeed commercially’ (we previously explored Peter Jackson’s analysis on glocalisation in our case study of Spiderman India in 2004).

Emerging markets and fast food

The business community uses phrases like ‘emerging markets’ or ‘emerging economies’ to describe middle-income countries where rapid industrialisation and growing consumption are now taking place. You may be more used to talking about newly industrialised countries (NICs) or the BRIC group (Brazil, Russia, India and China). Whatever label is used, these countries offer major expansion opportunities to TNCS, especially with high-street sales stagnating in the EU and North America, following the global economic downturn that began in 2008.

TNCs are especially interested in building their business in the largest emerging markets, comprising of nearly one half of the world’s entire population:

• Brazil (190 million people of whom 105 million earn more than US$10 a day) and Mexico (110 million people, 65 per cent of whom are middle-income earners)

• China (the world’s largest market for many products; one quarter of its 1.43 billion people are now middle-income earners of more than US$3,650 a year)

• India (a small, but rapidly growing percentage of its 1.2 billion people are consumers of luxury goods, and India has a growing middle class) and Indonesia (a large emerging market of nearly 250 million people, one-fifth of whom are middle-income earners)

The diversity debate

The global diffusion of fast food often gets discussed in relation to a fear that globalisation is responsible for cultural homogenisation on a global scale. There is concern that local cultures are being ‘extinguished’ as a result of the global ‘roll-out’ of uniform services, such as McDonald’s restaurants - some people even term it ‘McDonaldisation’!

In extreme cases, this process of homogenisation gets described as cultural imperialism.

However, the case for reduced diversity is not a clear-cut one. As we shall see in the next section, some McDonald’s menus in India have remained entirely vegetarian. If the offerings of fast food TNCs are sufficiently varied in each different territory, then perhaps global culture is not becoming increasingly homogenous (the same) after all? For example, foreign chain restaurants account for less than 5 per cent of India’s total fast-food market. It can be a very inaccurate assumption that just because an individual eats in a fast food restaurant run by an international company, be it McDonald’s or another company, that this must mean that their existing sense of identity, nationally or religious beliefs are automatically diminished.