[INTERVIEW] McDonald's grows ESG, local sourcing
![Kim Ki-won, the managing director of McDonald’s Korea, poses for a photo after an interview with the Korea JoongAng Daily at McDonald's Korean headquarters in Jongno District, central Seoul, on June 22. [PARK SANG-MOON]](https://koreajoongangdaily.joins.com/data/photo/2023/07/09/28c101bb-9ca5-4ab5-b659-ea5463a03062.jpg)
Kim Ki-won, the managing director of McDonald’s Korea, poses for a photo after an interview with the Korea JoongAng Daily at McDonald's Korean headquarters in Jongno District, central Seoul, on June 22. [PARK SANG-MOON]
McDonald's is best known for its fast service in delivering burgers, but the Korean unit of the Chicago-based food franchise zeroes in on sustainable ingredient sourcing and environmentally responsible operations in line with McDonald’s global initiatives.
The company's sourcing strategy involves forming partnerships with local farm communities, translating into uniquely localized menus.
Kim Ki-won, managing director at McDonald’s Korea, spearheaded the Taste of Korea project, which utilizes homegrown Korean ingredients to create new menu items. The initiative provides customers with fresh and flavorful choices while also supporting the local farming community, contributing to increased sales. The project introduced the Changnyeong Garlic Burger, followed by the Boseong Green Tea Pork Burger, and most recently, the Jindo Green Onion Cream Croquette Burger, freshly launched on Thursday.
In running some 400 stores in Korea, McDonald's aims to transition all packaging materials to renewable or recyclable alternatives by 2025. The company has already partnered with a fashion brand to produce uniforms made from cup lids, and repurposed coffee waste from their McCafé brand as animal feed.
Drawing upon the experience of the BTS Set — a collaboration between McDonald's and the K-pop superstars, which was completely sold out due to its global popularity — McDonald's Korea's new commercial campaign centers around the "NewJeans Chicken Dance Campaign." The campaign, the company's first global campaign, gained traction thanks to the popularity of the K-pop super rookies and is gradually being rolled out in the Philippines, Thailand, Indonesia, Brunei, Malaysia, Hong Kong, Taiwan, Singapore, and Vietnam.
After thirty-five years in the Korean market, McDonald's faces an evolving market landscape with newly emerging small, independent burger joints, as well as new players like Five Guys and Shake Shack, all vying for a slice of the market.
The Korea JoongAng Daily sat down with Kim at McDonald's Korean headquarters in Jongno District, central Seoul, on June 22 to discuss its strategies for maintaining its dominant market position and its commitment to environment, social and governance (ESG) mandates.
This interview has been edited for length and clarity.
What is your take on the significance of the Korean market to McDonald's from a global standpoint?
Korea stands out as a market known for its fast and extensive adoption of new concepts and rigorous testing. One key factor is the Korean people's exceptionally high standards when it comes to taste and quality.
For example, McDonald’s introduced the "Best Burger” initiative, which encompasses a complete overhaul of the cooking process, ingredient preparation, storage methods, and recipes. And Korea was the fourth global market and the first in Asia to introduce such an initiative. The reason for our prioritizing in this manner is it is important to have an idea proven and effectively executed in our market, and establishing a successful case in Korea is crucial for expanding the idea to other markets. McDonald's employees from Indonesia, Thailand, and the Philippines visited Korea in late February to see our system and gain our know-how.
With over 400 locations in Korea, even though we may not have the largest number of branches, our sales numbers are very strong amongst Asian markets.
For example, McDonald’s introduced the "Best Burger” initiative, which encompasses a complete overhaul of the cooking process, ingredient preparation, storage methods, and recipes. And Korea was the fourth global market and the first in Asia to introduce such an initiative. The reason for our prioritizing in this manner is it is important to have an idea proven and effectively executed in our market, and establishing a successful case in Korea is crucial for expanding the idea to other markets. McDonald's employees from Indonesia, Thailand, and the Philippines visited Korea in late February to see our system and gain our know-how.
With over 400 locations in Korea, even though we may not have the largest number of branches, our sales numbers are very strong amongst Asian markets.
The Korean image is becoming trendy around the world. Could you elaborate on the differences between McDonald's in Korea and in other Asian countries?
We have a concept called the "Menu Calendar," which involves sharing menu planning decisions with other Asian markets, and the products and sauces developed in Korea are of high interest. We often witness instances where the products we create are launched in localized forms. Moreover, there is a genuine fascination with Korean cuisine itself, resulting in the widespread appeal of sauces like gochujang.
Furthermore, as part of the New Jeans Chicken Dance Campaign, a number of markets are expected to launch menus with “Korea” included in the name. The McCrispy Burgers we introduced last year has also drawn a lot of interest, as other markets have visited us to learn the recipe for the McCrispy Burger from Korea and to expand its reach further. Additionally, the sauce that was sold during “The BTS Set” campaign also originated from Korea. These are just a few examples of the many ways in which such exports occur.
Furthermore, as part of the New Jeans Chicken Dance Campaign, a number of markets are expected to launch menus with “Korea” included in the name. The McCrispy Burgers we introduced last year has also drawn a lot of interest, as other markets have visited us to learn the recipe for the McCrispy Burger from Korea and to expand its reach further. Additionally, the sauce that was sold during “The BTS Set” campaign also originated from Korea. These are just a few examples of the many ways in which such exports occur.
![Models pose with an image of the Jindo Green Onion Cream Croquette Burger, the third menu item of McDonald's Korea's Taste of Korea project and made using approximately 50 tons of green onions from Jindo Island off the southwestern tip of the Korean peninsula. [MCDONALD'S KOREA]](https://koreajoongangdaily.joins.com/data/photo/2023/07/09/b17e3ce0-e35f-43e4-97cf-bded6a375fdb.jpg)
Models pose with an image of the Jindo Green Onion Cream Croquette Burger, the third menu item of McDonald's Korea's Taste of Korea project and made using approximately 50 tons of green onions from Jindo Island off the southwestern tip of the Korean peninsula. [MCDONALD'S KOREA]
What is your emphasis when it comes to sourcing ingredients?
In terms of ingredients, quality is our utmost priority. Customers visiting fast food restaurants seek convenience and quick enjoyment of their food, but even though convenience is important, we refuse to compromise on quality. With approximately 400,000 people served per day, we believe we are playing a role in the nation's health. Therefore, it is crucial for us to provide food that is both convenient and genuinely good, and we are putting the most investment into improving product quality.
Analyzing insights from Korean consumers, domestically grown agricultural ingredients are highly regarded as superior. This is why we place great value on using domestically-grown agricultural ingredients for over 60 percent of our raw materials.
One project that exemplifies this concept is the "Taste of Korea," which holds a special place in my heart and evokes a sense of pride. It involves incorporating the most renowned agricultural ingredients from specific regions into our burgers. By doing so, we offer customers burgers of exceptional quality while also contributing to the economic revitalization of the local areas. The local communities truly cherish the increased recognition, acknowledgment of quality, and the subsequent boost in sales. While we aim to prepare burgers quickly, we take the necessary time to ensure excellent quality.
Analyzing insights from Korean consumers, domestically grown agricultural ingredients are highly regarded as superior. This is why we place great value on using domestically-grown agricultural ingredients for over 60 percent of our raw materials.
One project that exemplifies this concept is the "Taste of Korea," which holds a special place in my heart and evokes a sense of pride. It involves incorporating the most renowned agricultural ingredients from specific regions into our burgers. By doing so, we offer customers burgers of exceptional quality while also contributing to the economic revitalization of the local areas. The local communities truly cherish the increased recognition, acknowledgment of quality, and the subsequent boost in sales. While we aim to prepare burgers quickly, we take the necessary time to ensure excellent quality.
Despite achieving record-breaking sales, McDonald’s Korea continue to face operating losses over the past four years. What strategies are in place to improve profitability?
In my opinion, now is the opportune time to invest in creating better products rather than solely focusing on improving profitability. Building stronger trust and affection from our customers is paramount.
First and foremost, a key strategy is to expand our store network, making McDonald's more accessible to a larger audience. Naturally, this expansion will result in increased sales. Our plan is to reach 500 locations by 2030, prioritizing development in areas with high demand but no existing McDonald's presence.
Moreover, we understand the value customers place on a company fulfilling its social responsibilities. For instance, when customers purchase the "Prosperity Burger," a portion of the proceeds is donated to the RMHC (Ronald McDonald House Charities) for fundraising campaigns. Additionally, we are expediting the construction of a second RMHC House in the greater Seoul area.
First and foremost, a key strategy is to expand our store network, making McDonald's more accessible to a larger audience. Naturally, this expansion will result in increased sales. Our plan is to reach 500 locations by 2030, prioritizing development in areas with high demand but no existing McDonald's presence.
Moreover, we understand the value customers place on a company fulfilling its social responsibilities. For instance, when customers purchase the "Prosperity Burger," a portion of the proceeds is donated to the RMHC (Ronald McDonald House Charities) for fundraising campaigns. Additionally, we are expediting the construction of a second RMHC House in the greater Seoul area.
![Cows eat feed made from coffee waste of McDonald's McCafé [MCDONALD'S KOREA]](https://koreajoongangdaily.joins.com/data/photo/2023/07/09/457d27b1-07d6-46da-aafa-8de73401839b.jpg)
Cows eat feed made from coffee waste of McDonald's McCafé [MCDONALD'S KOREA]
Many companies are emphasizing ESG, especially environmentally sustainable practices. What is your approach to environmental management?
We have actively implemented systems that promote circularity and resource recycling. For instance, our restaurants provide lids that do not need plastic straws, and all our company-owned stores utilize environmentally friendly electric bikes.
Additionally, within our McCafé operations, we generate a significant amount of coffee waste. To address this, we have found that coffee waste can be transformed into highly nutritious animal feed. Through upcycling, cows that consume this high-quality feed produce milk, which we then utilize to make ice cream and shakes in our stores — another example of circularity. The coffee waste is also repurposed as an environmentally friendly exterior cleaner in our stores. Through these ongoing initiatives, we aim to contribute to carbon neutrality and other sustainable goals.'
Additionally, within our McCafé operations, we generate a significant amount of coffee waste. To address this, we have found that coffee waste can be transformed into highly nutritious animal feed. Through upcycling, cows that consume this high-quality feed produce milk, which we then utilize to make ice cream and shakes in our stores — another example of circularity. The coffee waste is also repurposed as an environmentally friendly exterior cleaner in our stores. Through these ongoing initiatives, we aim to contribute to carbon neutrality and other sustainable goals.'
Amidst the competition with premium burger brands in Korea, what strategies are in place for survival?
I embrace the entry of such brands for a particular reason. The burger market is not one where a single entity comes in and dominates; it is a structure that continually expands. Therefore, I view the expansion of the category and increased burger consumption as positive trends.
And I have always believed that McDonald's would not be significantly impacted. The pricing strategies employed by these newly emerging premium burger brands have higher price ranges, tending to target special occasions rather than everyday consumers. However, our focus is on serving 400,000 people daily. McDonald's exists as a restaurant that is accessible and welcoming to all, like a close friend whom I can comfortably visit near my home. This is why I don't think McDonald's has ever experienced a decline in business due to the emergence of new burger brands.
And I have always believed that McDonald's would not be significantly impacted. The pricing strategies employed by these newly emerging premium burger brands have higher price ranges, tending to target special occasions rather than everyday consumers. However, our focus is on serving 400,000 people daily. McDonald's exists as a restaurant that is accessible and welcoming to all, like a close friend whom I can comfortably visit near my home. This is why I don't think McDonald's has ever experienced a decline in business due to the emergence of new burger brands.
![A promotional poster of the NewJeans Chicken Dance Campaign, McDonald's Korea's first global campaign [MCDONALD'S KOREA]](https://koreajoongangdaily.joins.com/data/photo/2023/07/09/1032a33b-1aa8-49e2-8659-14ccc4258b15.jpg)
A promotional poster of the NewJeans Chicken Dance Campaign, McDonald's Korea's first global campaign [MCDONALD'S KOREA]
McDonald's Korea recently led a global campaign called the NewJeans Chicken Dance Campaign, collaborating with the rookie K-pop girl group. Can you tell us more about this campaign?
The NewJeans Chicken Dance Campaign is an exciting collaboration between McDonald's Korea and NewJeans, who became our domestic brand ambassador last March. The purpose of this campaign is to provide a delightful experience to customers from diverse backgrounds, extending beyond millennials and Gen Z, by visiting McDonald's and immersing themselves in K-pop and K-pop stars.
This campaign marks the first time that a Korean-developed campaign will be simultaneously executed in other countries. The previous BTS campaign was a global project, and due to the Covid-19 pandemic and the artists being Korean, the Korean team played a major role in collaboration, communication, and active involvement in campaign development and advertisement production. However, it is different this time as from planning, artist selection, and campaign creation, we did it all ourselves and then exported it to other countries.
The decision to focus on chicken is rooted in the significant growth of the global chicken category, not just in Korea but globally, even though McDonald's is primarily known for its beef offerings. We wanted McDonald's chicken products, like the popular McWings from McDonald's summer side menu, to gain more recognition, with their distinctive recipes and taste. In the past, hamburgers were traditionally associated solely with beef, but now we are witnessing a lovely diversification.
This campaign marks the first time that a Korean-developed campaign will be simultaneously executed in other countries. The previous BTS campaign was a global project, and due to the Covid-19 pandemic and the artists being Korean, the Korean team played a major role in collaboration, communication, and active involvement in campaign development and advertisement production. However, it is different this time as from planning, artist selection, and campaign creation, we did it all ourselves and then exported it to other countries.
The decision to focus on chicken is rooted in the significant growth of the global chicken category, not just in Korea but globally, even though McDonald's is primarily known for its beef offerings. We wanted McDonald's chicken products, like the popular McWings from McDonald's summer side menu, to gain more recognition, with their distinctive recipes and taste. In the past, hamburgers were traditionally associated solely with beef, but now we are witnessing a lovely diversification.
Can you share with us any behind-the-scenes episodes about NewJeans and the BTS campaign?
When it came to presenting chicken in a fun and sophisticated way, the members of NewJeans put their heads together and came up with their own unique choreography. The music was also specifically created for the campaign.
In addition, it's common for models not to eat much during shoots because they have to redo their makeup and styling. But what I noticed when I saw BTS on set was that they have genuinely loved and enjoyed McDonald's from a young age, because they would already finish the food after a shot. So we had to prepare and serve a second helping. It may seem like a small detail, but I found it interesting because the models' authenticity would be lacking unless they truly enjoy the product. A key aspect of a campaign is what people order and consume, and they brought their unique insights to the table.
In addition, it's common for models not to eat much during shoots because they have to redo their makeup and styling. But what I noticed when I saw BTS on set was that they have genuinely loved and enjoyed McDonald's from a young age, because they would already finish the food after a shot. So we had to prepare and serve a second helping. It may seem like a small detail, but I found it interesting because the models' authenticity would be lacking unless they truly enjoy the product. A key aspect of a campaign is what people order and consume, and they brought their unique insights to the table.
BY SEO JI-EUN [seo.jieun1@joongang.co.kr]
with the Korea JoongAng Daily
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