McDonald's slips post-fast-food eatery into Sydney

By Robert Stockdill

Friday 28th June 2002 1 Comment

CASUAL FOOD: But not a French fry in sight at Sydney's first 'casual eating' Boston Market

As the fast-food market reaches saturation point in the US, McDonald's and its rivals are turning to a new dining format dubbed fast casual to ensure future corporate growth.

McDonald's biggest fast casual venture, Boston Market, has arrived down under with the first trial store trading in Sydney and another under construction.

McDonald's executives won't comment on plans for Boston Market in New Zealand but Australian management say McDonald's executives from several countries have studied the new Sydney store and don't deny New Zealanders are on that list.

Boston Market was founded back in 1985 as Boston Chicken, to cash in on the then vogue home meal replacement industry - companies providing ready to eat or ready to heat and eat meals and meal components for time-starved consumers who wanted something more nutritious and home-like than fast food.

The company set spectacular growth records, growing to nearly 1200 stores throughout the US by the late 1990s. But the walls fell in and the entire operation was placed in chapter 11 bankruptcy protection.

Enter McDonald's, in December 1999, which saw value in some 650 prime sites occupied by Boston Chicken stores, by this time renamed Boston Market to reflect a menu broader than just chicken-based meals.

But rather than progressively convert all the stores to fast food outlets bearing the golden arches, McDonald's management recognised the inherent value in not only the Boston Market brand but also its newly carved fast-casual niche. And so it surprised the US food industry by investing in the chain and developing it.

The fast-casual concept is all about providing wholesome food for the whole family in a restaurant-like environment.

Overheads are saved by counter ordering and not using waiting staff. That and menu specialisation geared to higher volumes than traditional restaurants together with drive-
through and take-out services, allow fast-casual restaurants to set price points slightly higher than fast-food alternatives but well below full-service restaurants.

As the fast-food industry shows danger of imploding through oversupply and the baby boomer market maturing beyond the burger, fries and cola concept, all the major players are investing in the category.

Early this month, McDonald's rival Wendy's announced plans to buy 169-strong Baja Fresh Mexican Grill chain. In April, McDonald's signed a letter of intent with 400-strong Fazoli's chain, a fast-casual Italian restaurant concept based in Kentucky. The two companies will form a joint venture to develop 20 to 30 Fazoli's restaurants in three US markets. McDonald's has an option to buy the entire company at a later date.

McDonald's also has a stake in Britain's upmarket Pret-a-Manger sandwich chain and the 200-strong US Chipotle chain.

Sydney's Boston Market trial store - the most likely model for a New Zealand Boston Market chain when it comes - is located on the city-to-western suburbs arterial route Parramatta Rd, at middle-class Burwood, two blocks from the Concord Oval.

It looks nothing like a McDonald's and there are no fries on the menu. Alongside a small selection of carbonated beverages is a traditional American lemonade - one of the most successful menu items in the Sydney store.

The restaurant boasts seating for 76 inside and 50 out and its decor is as far from McDonald's as it gets: polished timber floors and wall panelling, movable tables and deli-style glass serveries. Like much of the Sydney store and its menu, the decor has been moved up a notch from the US norm to meet the local market.

The menu is primarily chicken based but, where the US stores offer beef as well, Sydney offers lamb. Beef may yet come. Some 70-80% of the meal preparation is carried out onsite, including the marinating and roasting of chickens, salad mixes, vegetable cooking and bread-baking (albeit from par-baked mix).

Customers can choose from individual meals ranging in price from $A9.95 to $12.95 depending on the size, kids meals, ($5.95-6.95) or family meals for three plus ($24.95-27.95). Diners make up their meals by selecting side dishes (included in the price but available separately as well) such as creamed spinach, American-style cornbread, rice pilaf, seasoned corn, mashed potato, macaroni and cheese, green beans tossed in garlic butter, mashed pumpkin with nutmeg, peas with mint and coleslaw.

The sides are a mixture of standard US menu items and those developed with the local palate in mind.

Desserts include the trademark American chocolate brownie or an Aussie-style sticky date steamed pudding. Premium Lavazza brand coffee is served.

There's no liquor on offer yet but a licence will be sought if there's sufficient customer demand. Meals can be charged to a credit card.

Valuable lessons have already been learned from the trial store - diners are randomly surveyed on a regular basis and the menu and format tweaked according to feedback. Among the first lessons: Sydneysiders do not appreciate being served their food on disposable plates; the meals are all served on crockery now.

Given Sydney's vast size, it's difficult to mount a cost-efficient advertising campaign to build patronage at a single suburban store. Efforts have included letterbox drops and some radio spots and word is slowly spreading. About 13% of sales are through the drive-through, although Boston Market expects that proportion to rise.

Boston Market Australia manager Sharon Paz says the concept, which opened on March 1, is scoring high with consumers in the all-important value stakes. But she's frank about the amount of detail yet to be learned.

"We're still not 100% sure who our Australian target market is. We picked a site on a busy road with a broad range of people in the catchment area. As we get to know our Boston Market customers, the sites we choose to build on will reflect that."

Given Sydney's mature urban development, locating sites close to the city centre will be difficult - the concept needs generous parking and room for a drive-through facility, so the size and thus cost of the footprint may challenge store viability.

Work is under way on a food court format, which would suit more upmarket communal dining areas such as those in Reading's new Wellington development or the Rialto Centre in Newmarket, Auckland. But don't expect to find them in a shopping mall food court.

Sydney's Boston Market is McDonald's first outside the US, although a Canadian one is under construction. McDonald's is the world's largest foodservice retailer with more than 30,000 restaurants in 121 countries, serving 46 million customers each day.

Statistics like that put the Boston Market trial in perspective on a global scale but new- generation eateries like this could well be the start of an important rearguard action to ensure McDonald's maintains that serving power a decade or more from now.

Comments from our readers

On 2 January 2011 at 2:24 pm CK said:

Well *that* didn't work out, did it? A number of Maccas got shut down for the conversion and never came back. Shame though, as I liked the faux-southern "cornbread" and fried chicken, which earned it the reputation of "blackdonalds" amongst my friends.