McDonald's has opened five hamburger stands on the beach in Santa Monica, but you won't find them by looking for the company's famous golden arches. In response to community concerns about protecting the scenic beach from commercialization, McDonald's has agreed to keep a low profile, with only a brown lettered sign on the front and American flags flying overhead to identify the location of each stand.
But, unfortunately for the company, the stands seem to be so unobtrusive that some potential customers have not found them.
The absence of McDonald's trademark golden arches was "a definite factor" in low first-year sales last summer, said Reginald Webb, the company's regional vice president. Although it respects the community's wishes to keep the beach beautiful, he said, "a little more signing in any kind of way would help."
In its winning bid to run five of the city of Santa Monica's beach concessions, McDonald's predicted first-year sales of $3.5 million, according to city officials. But because of construction delays, they said, the stands opened late and sales totaled only $295,235 last year.
Much Higher Costs
Revenues were barely sufficient to cover the $200,000 minimum annual fee McDonald's agreed to pay the city to operate the beachfront concessions.
The main reason sales were so low is that the stands were not open for the full season, Webb said. McDonald's found that instead of remodeling existing facilities for about $500,000 as originally planned, structures had to be built nearly from scratch at a cost of more than $1 million.
In addition, Webb said, the city ordered construction stopped midway because of community objections to the height of beachfront development that inadvertently violated a municipal ordinance. This problem was corrected, he said, but McDonald's lost much of the summer business because of the delays.
One stand did not open until Sept. 29 and one never opened, according to Donald Arnett, city director of recreation and parks. The others opened last year on June 30, July 16 and Aug. 22, he said.
Webb said that because there were no golden arches, many beach-goers did not know McDonald's was there with its $1.39 Big Macs and 79-cent french fries, so they brought lunches.
Because its distinctive signs cannot be used on the beach, Webb said, McDonald's has initiated other marketing strategies. The company is advertising the locations of the beach stands--two are south of the Santa Monica Pier near Ocean Park Boulevard and three are north of the pier--on tray liners and bag stuffers at 70 McDonald's restaurants in Southern California.
Also to attract beach customers, McDonald's has added to its usual offerings suntan lotion and hot-weather treats such as ice cream bars and snow cones.
He said company officials hope eventually to gain community acceptance to fly the McDonald's flag along with the American flag to help beachgoers spot the stands.
Hot Weather Helps
For now, Webb said, business is picking up dramatically as Los Angeles temperatures hit record highs and residents head for the beach.
This summer will be the test for the project, which is the first time McDonald's has entered into a cooperative agreement with a city to run beach concessions, he said.
"This is very much a pioneering kind of thing," he said.
There are signs that sales will be strong for McDonald's in its first full season at the beach, Webb said. Last weekend's business was "phenomenal" and the company expects $25,000 in sales for the July 4 holiday, he said.