Premier Capital plc, the Maltese-owned developmental licensee for McDonald’s in Malta, Estonia, Latvia, Lithuania and Greece, was last week granted the developmental licence for McDonald’s in Romania. Premier Capital chairman Melo Hili speaks to Anthony Manduca about this latest acquisition and the company’s priorities and challenges.

“The potential for McDonald’s in Romania is massive,” says Melo Hili. “It has a population of almost 20 million and it has become our biggest market. We have 4,000 employees there, increasing our total workforce from 2,800 to 6,800. In 2016 we are looking at a turnover for Premier Capital of €230 million, and half of this is coming from Romania.”

The addition of the Romanian market to Premier Capital’s list of developmental licences for McDonald’s gives the company six markets, 131 restaurants and 100 million customers a year – quite an achievement.

What is the secret of the company’s success?

“I think there is no secret at all. We picked up a model that we started developing to run our restaurants in Malta; we have a good team of people; and we were lucky enough to have been chosen to take on other markets, first in the Baltics in 2007, then Greece – probably the more challenging one – in 2011, and now Romania,” he says.

“We have to create a chain of store openings in Romania and then start adding numbers to it. We have 131 restaurants in all six markets, and the plan is that by 2018 we’ll have 150.”

Mr Hili says Premier Capital was chosen to run the markets in the Baltic States, Greece and Romania because opportunities arose in those particular countries. “The brands were already there and we took them over and improved them.

“When we went into the Baltic States there were 19 stores; we refurbished them, upgraded them and opened more restaurants – today we have 33 of them,” the company chairman says.

He adds: “McDonald’s obviously have their strategy on how they want to develop the business, it’s not as though McDonald’s have moved out of the market; they are still partners in this and they ask us to manage the business.”

In 2016 we are looking at a turnover for Premier Capital of €230 million and half of this is coming from Romania

He says the company’s marketing strategies depends on the country they are in, taking into account the particular markets’ culture and trends, adding that “we employ a lot of people in these countries so the local knowledge is there”.

Mr Hili says that challenges arise at different times, depending a lot on the state of the economy in a particular market.

“We entered the Baltic States in 2007 and did very well, but in last quarter of 2009 and the beginning of 2010 the global financial crisis hit them, but we reshaped, regrouped and grew the business again.”

What about Greece?

“Yes, Greece has been challenging. For example, when VAT went up from 13 per cent to 23 per cent, that affects your price; you try not to pass it on all to the customer, but most of it has to be passed on.

“And of course, the unemployment rate has a major bearing on the business.”

He still insists, however, that besides Romania, Greece has the greatest potential for growth, as does Lithuania, “which has a pop­u­­lation of three million-plus, and where there are only 11 outlets”.

Asked about the type of competition McDonald’s faces in his markets, Mr Hili says: “In Romania the biggest competitor is KFC, but we are market leaders; in the Baltics it’s a brand called Hesburger, a Finnish brand which operates more stores and smaller stores; in Greece there’s a local brand called Goody’s which is very similar to McDonald’s. So yes, there is plenty of competition, not only from the brands we know but from any eating place.”

He points out that McDonald’s are “by far” the market leaders in Malta and that “in the Baltics we’re head-to-head with Hesburger, and in Greece we lag behind a little bit”.

What level of control over these markets does Premier Capital have from Malta?

“We don’t micromanage them and we don’t run the business from here. There’s a management team in every market, although in the Baltics there’s one team that manages all three countries. Of course, we visit the markets all the time. The most important thing in the business are the people: the customers and the employees. Whatever we do, whatever money we spend, is to keep them happy,” he says.

Asked how McDonald’s is responding to the fact that consumers are becoming more health conscious, Mr Hili says: “We have products like salads which are growing – but still not a substantial part of the business – and the coffee business has grown as well. The McCafe business is also doing well.”

He says McCafes are present in the other markets, “but they are not as successful as they are here in Malta. The concept is good; it’s a good brand and I think that in other places they might need a bit more development and focus. In Romania, out of 67 stores there are 19 McCafes. This year we plan to have another six.”

What did McDonald’s teach him about business?

“The way to conduct business, I think, is good, it’s a very serious organisation and be­cause it is present in so many places one can learn a lot from them. Their business model is successful and the same everywhere; obviously it is adapted to the local culture and trends of the various markets.”

‘It’s affordable and a brand you know’

He also says that in the global picture of McDonald’s, Malta is part of the foundation segment, a group of just under 100 small and medium-sized markets with po­tential for growth, such as Singapore, where “we learn from each other’s experiences and share ideas about products, developments”.

Mr Hili says that McDonald’s in Malta is well established and that they know their customers’ profile well.

“We conduct surveys two or three times a year and we have a good spread everywhere.

“Our customers are young children with their parents, young teens, middle-aged people, pensioners and tourists.

“It’s affordable and it’s a brand you know, so wherever you go you should be getting the same experience.”

McDonald’s has eight outlets in Malta and one in Gozo, including the Buġibba store that closed a couple of months ago and is being relocated later on this year about 200 metres from the old one.

Regarding possible further expansion in Malta Mr Hili says that if opportunities arise for drive-throughs “that’s something we will surely look at”.

He explains that the company in Malta employs about 800 people who are trained here, and then at a certain level they are sent for further training to either Munich or London, adding that due to the language the Maltese tend to go to London.

“Besides that, we also run, at Hili Ventures [Premier Capital is the McDonald’s division of this group] specific management and leadership training programmes, tailor-made for our people.”

What are his immediate priori­ties? “Our priorities are to open more stores, and modernise the experience.

“In the Baltics we’ve introduced a system where you can order through a kiosk, and the system will come here as well when we open the new store in Buġibba.

“We also remain committed to the people we have – we have a large pool of people constantly coming up and moving across markets. People with us progress in their career; the person who runs Premier Capital, managing director Victor Tedesco, joined 20 years ago as a trainee.

“We recruit­ed 18 people and they were sent to Canada for training. We are a large employer and we offer people many opportunities.”

Was he targeting any other markets?

“Give me a break!” he replies.

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