The Burgermeister
By Carlos Alfaro

When Ralph Alvarez joined McDonald’s in 1994 he was already familiar with the quick service restaurant business. His resumé already had several executive level positions in rival Burger King and Wendy’s restaurants. His transition to the new company occurred during the early days of McDonalds growing focusing on diversity. Today, 12 years later, a third of the company’s employees are Hispanic as well as 12 percent of its U.S. officers who include Jose Armario, President of Latin America Group, J.C. Gonzalez-Mendez, Senior VP of Supply Chain for North America, Rudy Mendez, VP of Diversity for McDonald’s USA, and McDonald’s highest ranking Latina and Gloria Santona, Executive VP and Chief Corporate Counsel.

A household name in quick service restaurants and a case study in business, McDonald’s is one of the most successful franchise stories of all times. Its Hispanic-owned restaurants generate estimated annual revenues in excess of $1.5 billion. 787 restaurants in the U.S. are operated or owned by the members of the community and the McDonald’s Hispanic Owner’s Association (MHOA) is the largest organization of Hispanic franchisees in the country. As an active participant in the evolution of the company’s diversity strategy for many years now, Alvarez is a strong advocate for opportunities for all.

What has been your involvement in the diversity initiatives of the company, what is the current state of diversity and what initiatives are planned for the future?

This is an area I'm very passionate about. One of the reasons I was attracted to McDonald's when I joined the company in 1994 was the strong commitment to diversity in all aspects of the business.

In my role as President, I work very closely with Pat Harris, our Chief Diversity Officer and Rudy Mendez, our VP of Diversity & Inclusion to ensure that the organization is always gaining ground.

Together, we have developed and communicated a new business case for diversity that all of our employees, franchisees and suppliers are aligned with. Today, diversity is apparent from the crew room all the way to the board room. One example of how this has impacted our system is our workforce. Today, Latinos and other diversity group members hold many key leadership positions. An example of this is that 12 percent of our Officers are Hispanic!

The evolution of McDonald’s toward diversity as a business objective began in the mid-‘70s, when the company established an Affirmative Action Department —one of the first in the fast food industry—which is known today as the Diversity Initiatives Department. This department introduced a major initiative around diversity education in the late-‘70s. Changing Workforce Seminars were designed to educate all employees about the changing workforce. These highly successful seminars were soon followed by career development seminars for women, African-Americans and Hispanics.

While the seminars were one of the first diversity initiatives taken by McDonald’s, the employees themselves had already started informal networking activities on their own. Many of the employee networks were formed in the mid-’70s. Today they include the National Hispanic Employee Network, McDonald’s Hispanic Owner/Operators Association, Hispanic Leadership Council, Hispanic Steering Committee and the National McDonald’s Diversity Advisory Council, among others.

There is plenty of hype about health food; brands such as Krispy Kreme have been affected by it. In response to this, McDonald’s has launched a healthier line of products. How effective has this been and are there future plans to keep introducing these types of products?

For 50 years, we have led the industry when it comes to food quality and safety standards. We are extremely proud of our menu and take great pride in serving our customers wholesome food, made from quality ingredients.

In 2004, McDonald’s USA unveiled an unprecedented, comprehensive balanced, active lifestyles platform to help address obesity in America and improve the nation’s overall physical well-being. McDonald’s is committed to playing an active role in changing the obesity debate from pointing fingers of blame to a healthy discussion of the broader issue and how we can help address it.

McDonald's has launched new menu choices not as a response to diet fads or health claims, but because it's what our customers have been asking for. Experts agree that there are no “bad foods.” All foods can fit into a balanced, active lifestyle and that is why we provide menu variety and choice, with nutrition information and food facts to help our customers make informed choices whenever they come into our restaurants.

Customer response has been very positive. Since we introduced our Premium Salads in 2003, we have sold more than 500 million salads, making us the largest seller of salads in the U.S. We are a customer driven company, and as such, will continue to listen to, and meet the needs of, our valued customers.

It is estimated that over 60 people of people over 20 years old in the U.S. are overweight or obese. Given its influence on youth, what is McDonald’s doing to bring this number down?

According to recent studies, in the last 20 years, American teenagers aren’t eating that much more, but they are exercising much less. Their caloric intake is only about one percent more; but they’re exercising 13 percent less. Twenty-five percent of American school children do not attend any physical education classes in school. Illinois is the only state that requires physical education in grades K-12.

For more than 20 years, McDonald’s has sponsored programs that foster and teach the benefits of nutrition literacy, energy balance and physical fitness. More than 20 years ago, McDonald’s hosted a Ronald McDonald school show called “Fitness Fun with Ronald McDonald.” This show was seen by more than 1.8 million, 5-8 year-old children.

McDonald’s now inspires children to be more active with a unique program called “Get Moving with Ronald McDonald.” Since 2003, more than 50,000 children in the United States have seen this show at McDonald’s restaurants and in other venues. Ronald McDonald gets children up and moving in a fun and playful way to teach exercise and fitness.

In 2004, McDonald’s reallocated a significant portion of our marketing messages, from retail messages, to programming that positively impacts parents and their children in the areas of health, education and behavioral change.

In 2004, we also introduced McDonald’s Happy Meal Choices—offering parents a new selection of nutritious menu options for children. Happy Meal Choices provide customers with an option of a small serving of French fries or Apple Dippers (freshly peeled slices of apples, served with low fat caramel dipping sauce) as well as a selection of beverage choices: soft drink, low fat white or chocolate milk, or apple juice.

What would you advise an entrepreneur looking to become a McDonald’s franchisee in terms of location, market, etc...

McDonald’s owns the vast majority of the real estate where we do business in the U.S. Whether it’s a company-owned restaurant or franchisee location, McDonald's always looks for the best locations within the marketplace to provide our customers with convenience. We build quality restaurants in neighborhoods as well as airports, malls, tollways, and colleges at a value to our customers.

Our restaurants reflect our commitment of giving back to the communities in which we do business. When you walk into any one of them, you walk into a brand that extends into the community.

How is the company targeting Hispanics? Roughly what percentage of the marketing pie is being spent on this demographic and how effective has this been? How about other minorities?

We target Hispanics in all aspects of the business. On the employment front, we have developed Hispanic focused television commercials and print ads that speak directly to Latinos and help them see the true employment image of McDonald's.

We also sponsor partnerships with various national Hispanic organizations such as the National Puerto Rican Coalition, LULAC, the U.S. Hispanic Chamber of Commerce, the National Hispana Leadership institute, the National Council of La Raza, and MALDEF.

One of the future projects that we have embarked on is a workforce study that we just launched in partnership with the Thomas Rivera Policy Institute. We're going to take a very critical look at how we can do more to ensure that Latino and Latina employees are an even greater part of our McDonald's leadership team.

Nearly two years ago, McDonald’s Hispanic franchisees and employee saw an opportunity to better understand and serve the Hispanic consumer market. As a result, they developed the Hispanic Business Vision, designed to make the brand more appealing and inviting to McDonald’s Hispanic employees, franchisees, suppliers and customers.

Ensuring the McDonald’s brand remains relevant to Hispanic customers can have a ‘halo effect.’ Whether it is through bilingual restaurant signage and décor, new products or even attitude—it’s a different experience. It’s expressing to customers: "You are welcome at McDonald’s." It’s about creating the right environment for employees and making McDonald’s the best place to work, for example: offering educational tools to Hispanic employees to improve their language skills as well as offering Hispanic employee networks on a national and local level.

In addition to your skills and talent, your Hispanic heritage made you an interesting candidate to join McDonald’s and help with their operations in the Hispanic marketplace. Do you seek to hire executives who belong to the same demographic they are going to target?

Our overall goal is to be effective at recruiting a high performing diverse workforce at all levels within the organization.

The best recruiting tactic is to continue to focus on delivering internally on our strategy of building a high performing diverse workforce. Demonstrating it is more than just words, at McDonald’s.

There are four key areas of focus:

• Education and Development
• Training from crew orientation program all the way up to executive education classes on business strategy. We have world-class training that is available in many languages, including Spanish and English.
• Hispanic Career Development (HCD) – A two-day seminar, designed for entry-level restaurant managers and staff that helps participants understand and manage career management skills.
• Today at Hamburger University we have six bilingual HU Professors and 32 bilingual Training Consultants in the Field.
• In September we delivered our first class in Spanish without interpretation.
• Diversity Seminars that have been offered since 1979 helping participants develop their careers as well as to learn to manager and lead to create an inclusive workforce.
• McDonald’s trains more women and minorities than any other employer

• Advocate and Support Owner/Operator Networks

• Focus on Work Environment
• Ensure it values the unique contributions of our employees
• Employee feedback through our commitment survey – continue to strive to make McDonald’s an even better place to work
• Recognize importance of family and flexible scheduling.

• Focus on Talent Management
• Identify those with talent and grow them
• Focus on building relationships with community organizations and external diversity partnerships to build the brand and enhance system growth.
• Utilize recruitment support materials like in-restaurant merchandizing, print media, job fairs etc.

Five things a franchisee should always have in mind to successfully run a franchise.

When looking at a company, in my opinion, here are the most important things to consider. You want to be a part of a company that:

• Puts its customers first
• Has a good track record in business – has good products
• Never rests on its laurels, always strives to do better
• A company that is committed to doing the right thing
• A company that will provide local support in the areas of training, operations, human resources, real estate, construction, purchasing and maintenance, to name a few.

Five things to have in mind when opening (or planning on) a McDonald’s franchise

McDonald's has always been a franchising company and has relied on our franchisees to play a major role in the system's success. McDonald's remains committed to franchising as a predominant way of doing business.

Owning a McDonald's restaurant is a tremendous opportunity. Five things to have in mind when opening (or planning on opening) a McDonald’s franchise. You have to have:

• A passion for satisfying customers – providing an unparalleled level of Quality, Service, Cleanliness and Value
• Desire to be your own boss and grow a successful business – while taking advantage of a support system that has been in business for more than 50 years
• Desire and commitment to people – a diverse team of well-trained individuals working together, is the key to success. Ray Kroc, our founder once said, “Nne of us is as good as all of us.”
• Commitment to giving back to the communities in which you operate your business
• Desire to make money and have fun doing it!.

Ray Kroc also said, “McDonald’s doesn’t confer success on anyone. It takes guts and staying power to make it with one of our restaurants.

A total commitment of personal time and energy is the most important thing. You must be willing to work hard and concentrate exclusively on the challenge of operating that restaurant.”