McDonald’s loses branches in Finland as rivals push for market share
McDonald’s now has just 72 outlets after chopping 10 in 2015. The remainder largely consists of franchises (59) with the rest owned by the Finnish subsidiary (13).
The latter figure is the result of a 21-year franchisee’s retirement and sell-back to HQ - doubling the total. But of the 10 closed, nine were franchises. And in the 28 years McDonald’s has been in Finland, the bottom line has overwhelmingly been red, accumulating losses of €84m ($91m) requiring the American parent to inject €100m ($108.8m), Taloussanomat, a Finnish business publication has reported.
McDonald’s said most of the closures were because of rent agreements expiring and “that, before each contract ends, we evaluate each location before deciding to continue”, said Heli Ryhänen, McDonald’s Finland communications officer. “However we continue to invest in our restaurants look and feel, menu and people while monitoring new sites. Currently, we have no confirmed plans for new openings in Finland.”
Burger King replaces McDonald's
But what is one company’s retreat is another’s opportunity. McDonald’s withdrawal from two cities has seen two Burger Kings replace them. Ditto in three other cities, where Finland-based fast-food firm Hesburger has three in each.
Burger King returned to Finland just two years ago and now has 18 diners – soon to be 20 – one being the world’s first afloat aboard shipping company Tallink’s ferry Star that sails between Finland’s capital Helsinki and Estonia’s capital Tallinn. Burger King’s Finland franchise is under the wing of Finnish hotel and restaurant major Restel. Meanwhile, family-owned Finland-based ScanBurger has 110 franchised retailers. Hesburger with 276 sales points, roughly half franchisees, is Finland’s largest burger retailer by some distance though and has expanded into the Baltic States, Russia, Ukraine and Germany – with 172 branches in these countries and had group sales of €270m last year, with E€203m in Finland.
“The (Finland) outlet number has been stable for years, though we open and close a couple annually,” revealed Hesburger CEO Kari Salmela, adding: “The fast-food industry has always been extremely competitive and still is. From our perspective, nothing has changed.”
Fast-food buoyancy 'surprising'
Indeed, with a population of just 5.2 million, an economy struggling with high labour costs and taxes (GDP 2014: -0.4%; 2015: +0.3%; 2016 estimated: +0.7%), rising unemployment (near 10%) with over 22% of the young without a job, it is perhaps surprising that the country’s fast-food market remains buoyant, with an estimated growth of 2-3% last year, according to the Finnish Hospitality Association (MaRa).
Surprisingly, given how patriotic Finns are, most ingredients are imported, though an effort is made by Finnish chains to procure locally. McDonald’s hamburgers are Polish and its chicken comes from Denmark, while Burger King uses German beef. Hesburger and ScanBurger buy Finnish beef, although Hesburger also imports Danish meat too, its Angusburger meat is from Austria, and chicken from either Estonia or Finland.
To reinforce its marketing, Hesburger’s website has a link to the sources of all the ingredients in all its products (in Finnish only). Thus, with a few clicks, it is easy to know where something comes from – both the country and the production company. So its bacon burger’s bacon is sourced from the Netherlands’ Zanbergen Vleeswaren en Zn, using Dutch and German pork, and the beef burgers from Kaivon Liha Kaunismaa, Finland, using Finnish or Danish beef.