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McDonald's leaving Jamaica
Observer Reporter
Sunday, October 02, 2005

McDonald's, the American fast-food giant which came to Jamaica a decade ago, will be closing its eight restaurants and exit the local market, having failed to find a suitable franchisee for the operation here.

Four of the restaurants are located in Kingston, while the others, including a mobile unit in St Ann's Bay, are in rural towns.

The Observer was unable to establish how many workers are currently employed by the chain, or precisely when it will close. The manager of the chain in Jamaica, Steve Blackwood confirmed the impending closure, saying that his search for a suitable franchise operator had proven futile.

The exit will bring closure to a stormy 10 years in Jamaica for the iconic fast-food brand, which, despite having one of the most powerful and easily recognisable names of all American companies, just could not firmly implant itself in the market.

Indeed, McDonald's, which set up its first branch in the tourist resort of Montego Bay in September 1995, had initial success in the local market, expanding to 11 stores within a few years, and laying out an ambitious plan to further entrench itself in the market.

But the restaurant, which was run by Patricia Isaacs-Green, a native of Guyana who had previously held several executive positions with the American parent company, had arrived in the island years after its main rivals Burger King and KFC, both of which had gained an unshakable foothold in the market by 1995.

So when a raft of American fast-food chains including McDonald's began their stampede into Jamaica in the 1990s, many market analysts predicted a shakeout - which began to slowly materialise by the turn of the decade.

Like most of the new entrants, McDonald's lacked the deep market penetration enjoyed by KFC and Burger King to withstand the fierce competitive pressures that emerged in what many believed was an overcrowded fast-food environment. This was exacerbated by anaemic growth in the Jamaican economy.

McDonald's itself also over-reached in its expansion ambition, and had to quickly retreat from some markets - most notably in Port Antonio where it was forced to close within six months of opening because of soft demand for its products in the Portland parish capital.
By 2003 McDonald's, with 10 restaurants, was in a retreat mode.

Steve Blackwood

That year, Isaacs-Green gave up the franchise to start her own restaurant. In May of that same year, Three Rivers Management Limited, the wholly-owned subsidiary of McDonald's Corporation, and new owner of the Jamaican franchise, placed several of McDonald's assets, including real estate and equipment, on the auction block.

Among those was the plum real estate of 11 Knutsford Boulevard - a 2,700 square-foot ground floor location that was the pride of the brand in Jamaica.

McDonald's also sold its restaurant at 129 1/2 Old Hope Road, in Liguanea, Kingston, and auctioned the commercial equipment.
In August 2003, the chain closed its Washington Boulevard operations.

Importantly, a 23,294 square-foot undeveloped property on Half-Way-Tree Road in Cross Roads, which apparently had been earmarked for a restaurant was also put up for sale.
Nevertheless, Three Rivers Management continued to insist that the brand was in Jamaica to stay.

Later - in March 2005 - that message was given credence when McDonald's decided to set up its first mobile restaurant format in the island - at the Cool Oasis service station in St Ann's Bay.
At the time, Blackwood said that if successful, the formula would be replicated elsewhere across the island.

But while McDonald's may be the most important and best known American fast-food brand to exit the local market, it certainly is not the only one.

Those that came and went include:
. Shakey's Pizza that came in the 1980s and exited in the 1990s.

. TCBY, the American yogurt and ice-cream joint that began operations in Jamaica in the early 1990s, and in September 2001 closed down all three outlets in Jamaica, for what was called a "restructuring exercise".

. Taco Bell which came in the 1990s and closed down in stages, beginning in February 2002 with its Liguanea branch, followed later with the Constant Spring Road branch,
and its mobile unit located at the Mutual Life building on Oxford Road.

. Kenny Rogers fast-food chicken establishment

. Church's Fried Chicken.

. Bojangles, which had outlets in Kingston and Portmore.

An interesting footnote to the McDonald's exit is that it is happening during the very same year that businessman Vincent Chang closed his indigenous McDonald's restaurant that he has operated on Half-Way-Tree Road, Kingston since 1971. Chang will set up a Tastee restaurant at the location.

Chang who owns Tastee Ltd was taken to court by McDonald's Corporation which sought to have him discontinue using the McDonald's name once the American version came to Jamaica in 1995. Chang counter-sued and prevailed in the Jamaican courts.

However, he decided in May that Tastee was a stronger brand and that he would replace the McDonald's with a Tastee.



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