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McDonald's takes on pizza for Italy growth spurt

A McDonald's staff member serves soft drinks at their fast food restaurant in downtown Milan October 16, 2012. REUTERS/Stefano Rellandini
A McDonald's staff member serves soft drinks at their fast food restaurant in downtown Milan October 16, 2012. REUTERS/Stefano Rellandini

By Francesca Landini

MILAN (Reuters) - U.S. fastfood giant McDonald's believes recession-hit Italy will be one of its higher-growth areas in the coming decade and is opening more than 100 new restaurants to convert pizza-lovers to its burgers.

In a country where foreign investment has fallen by almost 30 percent since 2007, McDonald's Italian arm plans to spend 350 million euros ($457 million) and hire a further 3,000 people by 2015 to boost its market share.

"We believe in Italy, and we have convinced our shareholders in the United States that the Italian market has a potential we can exploit," McDonald's Italia Chief Executive Roberto Masi told Reuters in an interview.

In a country that has been stuck in recession since the end of 2011 and where unemployment is at a record high, McDonald's has trumpeted its pledge to raise its local workforce by 15 percent to around 20,000 over three years.

The U.S. group, which first set foot in Italy 27 years ago and was initially met with suspicion in the land of pizza and pasta, has launched a full-blown advertising offensive playing to Italians' patriotism.

"Italy is a democratic republic founded on work," reads the ad printed in Italy's biggest newspapers since the start of the year and citing the first article of Italy's constitution.

"We will create 3,000 more jobs. This is our way to show we believe in Italy," it says.

In the TV version of the commercial, shot by Oscar-winning Italian director Gabriele Salvatores, three young staff members in trademark uniforms tell how good it is to work for the chain's fast-food restaurants.

ANOTHER BRIC IN THE WALL

"McDonald's considers the euro zone debt crisis as something temporary," Masi said. "The company lumps Italy together with the BRIC countries (Brazil, Russia, China and India), the ones where it will grow more in the next 10 years."

Annual sales at McDonald's 450 Italian restaurants are estimated at around 1 billion euros, and its local workforce is nearly 1 percent of its worldwide staff.

In Europe, Italy and Spain - two countries at the sharp end of the euro zone debt crisis - are deemed to be the most promising markets, together with Russia.

But while in Spain and food-conscious France McDonald's has a market share of more than 10 percent of the 'informal eating out' sector, which excludes top restaurants, its share in Italy is just 2 percent, with a target of 3 percent by 2015.

Masi said that since the start of the financial crisis McDonald's had won customers in Italy by localising its offering, making sandwiches with crusty bread stuffed with Parmesan cheese and sliced ham.

Still, McDonald's investment pledge met skepticism in some quarters, showing the group still has a cultural hurdle to clear in Italy.

Left-wing trade union CGIL said 80 percent of the group's workers were on part-time contracts and forced to work at night or on Sundays, and accused the group's ads of "useless and misplaced rhetoric".

Roberto Burdese, chairman of Italy's Slow Food association, which strives to preserve traditional and regional cuisine, said McDonald's menus could not provide a balanced diet on a daily basis.

"We accept it, however, as a sort of theme park where you can go and dine every so often," he said.

The purveyor of Big Macs is no stranger to cultural sniffiness; last October Milan city council forced it to close its restaurant in the Galleria Vittorio Emanuele II, a tourist-packed shopping arcade 50 meters from the Duomo cathedral, to make way for a new outlet of luxury fashion brand Prada.

McDonald's drew more than 5,000 takers for the store's last-day offering of free burgers, fries and drinks.

($1 = 0.7654 euros)

(Editing by Silvia Aloisi and Will Waterman)

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