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February 25, 2005

Prof: Do Golden Arches make good neighbors?

The home of the Happy Meal isn’t always considered a welcome addition to the neighborhood. So when the McDonald’s Corp. wanted to show potentially touchy townspeople the value of having a Golden Arches next door, it called on Sacramento State Management professor Dennis Tootelian, who uncovered some eye-popping figures on the economic impact of their Northern California stores.

“People like McDonald’s but they don’t know if they want them in their neighborhood because of issues like traffic,” Tootelian says, ”But when you see the dollars they generate, it’s amazing both in terms of what they buy locally and the services they use.”

He found that annually, every California resident—man, woman and child—spends an average $67.34 at McDonald’s. Of that spending, restaurants put 45 cents of every dollar into the local economy, the biggest portion in wages. And that doesn’t even include charity.

Tootelian was also impressed with the relative stability of the chain’s employees. The average McDonald’s restaurant employs 40 people. “When you look at fast food employment, you tend to think of kids who last two or three months,” he says. “But at McDonald’s, the average worker is in a crew position for about a year versus seven months elsewhere. They also train a lot of young people in managerial positions.”

He compares it to big box stores, which get accused of bringing in a lot of low-income workers to high-cost markets. “With McDonald’s that’s not the way it is. Before I did the study, I’m not sure I would have bet on that.”
Since completing the Northern California study, Tootelian has conducted reports on 10 more states, including a special report for the mayor of Chicago to show the value of the company in its 50th year in market headquarters. He was also featured in the company’s 2004 worldwide corporate report.

Tootelian says McDonald’s is ahead of the game in seeking hard data on its impact on communities. “I don’t understand why others don’t do this. There are lots of companies that face public scrutiny and criticism their perceived negative impact on communities. But they offer no details of what they provide.”

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