Thanks in part to paying employees more, CEO Sarah Cassanova has put the chain back on top like never before.

Most people would probably not want to have been in Sara Cassanova’s shoes when she became CEO and president of McDonald’s Japan in 2013. Although it sounds like a sweet deal, the company had been dealing with some sluggish performance. According to some analysts, the strict cost-cutting of the previous CEO Eiko Harada had given McDonald’s an image of profitability that may not have really existed.

To make matters worse, one of those cost-saving measures appeared to have involved procuring meat from Shanghai Husi Foods, which only one year after Cassanova’s hiring was discovered to have been dealing expired and tainted chicken. It was like being made captain of a cruise ship with turned out to be made of cardboard rather than steel, only to have a sudden virus outbreak as well.

If all that wasn’t enough, in the following months other incidents of foreign objects in food occurred. The Canadian CEO may have underestimated how seriously the Japanese people take corporate apologies as well, and delays of a few days in her bow-filled mea culpas only served to turn off people even further.

By 2015, McDonald’s Japan had slid into a huge deficit of 34.9 billion yen (US$327 million) and customer faith was at an all-time low. Needless to say, things were looking bleak.

▼ Annual net income in millions of yen

● Raise it and they will come

Despite all this, Cassanova stayed the course and continued her work to undo the short-sighted and over-thrifty management practices of her predecessor. According to an economic analyst interviewed by Nifty News, one major change involved closing down excess stores and raising the wages of staff.

The concept behind this plan wasn’t novel: the more the workers get paid, the happier they are, and the happier they are, the better their service is. The new pay system which began in 2015 gave employees who got good performance reviews a wage increase while those who got poor reviews a decrease. As a result 2,900 workers quickly received a pay increase.

▼ And suddenly found a reason to give out free smiles again.

Bit by bit, people began to notice a marked increase in service. A few years ago, ordering a Big Mac may have resulted in a box full of jumbled meat and toppings, but now sandwiches often come out carefully crafted.

“Today’s Big Mac looks amazingly beautiful.”

● Democracy and Pocket Monsters

While that is a great move for many reasons, giving customer service a shot in the arm alone isn’t enough to save a company as deep in the red as they were. Another important strategy involved reminding the people in Japan how much McDonald’s was a part of the modern culture. Engaging campaigns like the battle between Japanese regional nicknames Makku and Makudo or the General Burger Election allowed the brand to gradually warm people’s hearts once again.

It wasn’t blatant, but these campaigns put the customers in the spotlight, rather than just shoving and endless line of new burgers in their faces. It made McDonald’s a place to have fun, taking part in an election or playing Pokemon rather than stuffing one’s face, which can be done anywhere.

▼ We even held the SoraNews24 Rockin’ Christmas party at McDonald’s.

At the same time, McDonald’s was also not losing sight of national eating trends by venturing into the occasional healthier meal options and offering higher-priced and higher-quality lines of burgers. It was a multi-pronged assault on the market. But there was still one more factor that contributed to their recovery.

● The competition did next to nothing

From 2014 to 2016 Ronald McDonald had been lying dead on the make-up-smeared asphalt, leaving behind a sizable hold in the market. And yet all of his rivals just seemed to stand around looking at each other, not knowing what to do.

In the years leading up to the fall of McDonald’s, Burger King seemed poised to take over with a slew of creative burgers and campaigns. However, in 2015 as McDonald’s was deep in the red and vulnerable to a death blow, Burger King began to fall strangely quiet.

▼ Not too little, but too late…

This year, after what appeared to be a long period of slumber, Burger King released Box Sets — reasonably priced yet jam-packed combo meals — that we being dubbed the Mac-Killers. However, it proved to be too late. Ronald had already trained with King Kai and traveled the Snake Way all the way back to the fast food battle with a new power level of over 9,000.

And with their renewed vigor, McDonald’s seems to have effortlessly taken back the market. For 23 straight months the company’s performance has been constantly increasing. From January to September 2017 sales have been up 13.2 percent, and by the end of the year McDonald’s Japan is expected to net 20 billion yen (US$187 million) making it the most profitable year in the company’s history.

In terms of both speed and scale, this success is nothing short of amazing — they’re even in a position to already begin expansion again. So let that be a lesson to all companies out there looking to boost your profits: start by paying your workers more! That’s what Cassanova did and now the company is surely lovin’ her.

Source: Nikkei Shimbun, Nifty News, Hachima Kiko
Images: SoraNews24