It's the biggest restaurant chain in the world, feed 69 million people a day.
We're a lightning rod because of our size.
The food is fast but what mcdonald's cooks up takes years to make.
We go inside the golden arches to find out what's in the secret sauce and how a restaurant built on burgers and fries stays competitive in a world of changing appetites.
Two all beef patties, let us onions pickles on a sesame seed bun.
It is all real food.
[captioning made possible by bloomberg television] mcdonald's raised its gordon arches in des plaines, illinois on april 15, 1935. first day sales -- averaged 366.1. today's mcdonald's fields over 15 million people in the west daily.
He's a goebel -- global brand.
Every day customers eat up nine million pounds of french fries, equal to the weight of 900 elephants.
There are over 145 items on the menu but it's the big five that bring home the bacon.
More americans visit mcdonald's than any other chain of any kind, including wal-marts and it's got the grocery lists to prove it.
Let's start with the fix i thinks.
4 million pounds of tomatoes, 14 million pounds of lettuce and don't hold that cheese.
They buy the -- 241 million pounds of cheese a year, $ billion, 3 billion more than the military's food budget and mcdonald's employs more thanen the army, navy, marine corps and air force combined.
40% of our executives at mcdonald's started as hourly employees.
Over 50% of our franchise knees, those that own and operate restaurants started as hourly employees.
There is no other institution i know of that can boast of those kinds of opportunities and success stories across the system.
At mcdonald's what we're really all about is making sure that regardless of where you came from this life.
Some of those people i just mentioned have high school diplomas only.
Some of them have their m.b.a.'s. it's a really diverse pool but every one of them has an opportunity.
Mcdonald's stands for opportunity.
You've been under fire, the company has for this financial planning website.
Former mcdonald's employees say it shows that mcdonald's is out of touch with the minimum wage worker.
How do you feel about that?
That's been out there for about five years.
This website and it was intended to do something very simple -- to help someone who might be entering the work force for the first time or someone who hadn't had financial planning or management practices or planning to be able to help manage finances.
When i was at a much younger age i didn't know anything about financial planning or management.
I would have loved to have had someone help me through.
That was -- what the website was about.
They're saying $20 for health care was unrealistic.
If there are two lines, but two people in it was intend told be a tool to help a person plan.
Regardless of their demographic or where that person came from.
It shows that it's difficult and impossible in many ways to live on the mine mum wage in the united states and therefore the minimum wage should be raised in the united states.
Do you agree with that?
I think we have legislators and many people to decide that.
We've always been a above minimum wage opportunity.
Whatever legislation will come, those will come.
Our franchisees and system will abide by them.
When we can be that entry level employee, provide the number of jobs we can and when we can help people be able to have viable income we're going to continue to do and provide tubblets so that a person can rise through the system and grain greater and greater wealth.
When we come back -- this was about four years in the making.
We'll sow -- show you how food goes from menu idea to the menu board.
That's how long it took to make this this, and this.
There are currently 145 choices, all of which took anywhere from nine months to four years to go from idea to your plate.
Mcdonald's lead food scientist and the brains behind the breakfast sandwich.
They wanted a kind of platter idea where you have your sausage and eggs and we finally arrived on the hot cake idea in a more portable fun way.
Getting an item on mickey d.'s menu is no easy feat.
How do you know when you have a new product whether or not you're going to be able to bring that up into, say, the top five.
It's hard to say what's going to be the next big mac and it's not until we get it into the restaurants ask show how it resident nails with our customers over time.
There are 45 members of the team, people who spend their days conceptualizing and exec -- executing new menu items like the now-famous smoothie.
You push the pomegranate smoothie button, you pick the size and it starts making a smoothie.
Altogether it's about 30 seconds from the time you start it, pull the cup and pour it.
Smoothies are on trend in the restaurant world, making up % of all menus, but not all menu items have panned out.
In the past we've had pizzas and mcdonald's and pizzas didn't go together.
How do you know it's time to pull a plug on a product?
If we don't have something we sell a lot of, then the quality cannot be consistent in a way we're proud of.
Something they are proud of, adding fresh produce to the menu.
That was a big deal.
Huge when mcdonald's got into that.
It took a lot of work to understand the different varieties.
What was the most surprising thing you learned?
How to ensure that you're in that zone of anywhere from about 36 to 45 degrees.
When you go beyond that you have a lot of change in that product's quality and characteristics.
Mcdonald's buys more than 60 million bounds of apples a year.
When mcdonald's rolledor outs theirwide bury smoothie, it took an extra year because they would have had dubai an extra percentage of drops in the u.s. there are a lot of things we do we never thought becould have done before.
The menu has to be innovative and exciting while maintaining the heritage and quality and taste of our core values.
A blueberry pomegranate smoothie was something we never taught -- thought about 10 years ago, or wraps.
You said last year the menu to you seemed to lack a bit of emergency.
What went wrong?
I think that -- i'll say less than when went wrong, what didn't we do.
It's always about opportunity.
Some of the opportunities we had were some of the products around the wrorled world, like the mcwraps, which originated in poland, to be able to come into the u.s. as a great entree and a introduces -- introduces new vegetables is phenomenal.
We want to focus on vegetables, chicken products, premium beach products and innovateive trays.
That's why you see again egg white delight, the new wrap sandwiches, the smoothies.
Smoothies we introduced a while ago but we have to remind customers that we have real fruit smoothies, not just sugar-based drinks.
Mango, pineapple, strawberry, banana.
Really great additions to the menu.
I noticed you used the word "real" very emphatically.
People criticize mcdonald's food.
They say mcdonald's is not real food.
How does that make you feel?
I visit our suppliers.
We are tremendously high quality pro teens.
Our meats, cheeses, vegetables.
We have a huge grocery list which gives us two things.
Leverage in terms of our buying power.
It's the reason we can afford to have our products at a low cost.
But why do customers say it's not real food?
I say get to know who we are as mcdonald's. i can't indict a person for what they believe.
All i can do is say who's who we really are.
Your beef is 100%? yes, 100%. we do add salt and pepper on the grill.
Your chicken, that's really -- yes, it is.
Breast meat chicken.
It's in our nuggets, whites male.
. is this why you're adding in egg whites, vegetables and smoothies.
Is that part of your emphasis on saying look, we're trying to offer more healthy foods at mcdonald's? health is going to be determined by the person who decides to buy that.
I will tell you yes, more fruits and vegetables is part of our plan.
At the same time, a big mac, two all beef patties, lettuce, cheese, pickles, onions on a sesame seed bun.
It is all fresh food.
So you lost 20 pound while eating on the menu?
What did you eat?
I'll have an egg white delight one day with canadian bacon.
Another day maybe with a sausage patty.
Some days i'll have our oatmeal.
Everyone has to make their own personal choices.
I made a choice because i was traveling a lot.
I said i have to get myself back into working out and i had fallen off the wagon so i began to work out more.
People when they hear, you eat at mcdonald's every day and lost weight, how is that possible?
Can you understand why people would be startled by that?
If i said i ate at a fine dining restaurant every night and i managed to lose weight.
now, in i'm -- if i'm out and i have a pretty big steak or a rack of ribs or something like that.
If i'm having that late at night and i go straight to bed, i might put on a few pound.
It's calories in, calories out.
But i don't eat food just for sass nance.
I want something that tastes great.
I've been eating at mcdonald's for a number of years.
I do better when i'm eating at mcdonald than when i'm off doing something different.
You're always going to sell french fries and chicken mcnuggets.
There's not a way to win the obesity debate.
Ray crock said i don't know what we'll be selling in the year 2000 but we'll sell more than anyone else.
I don't know what we'll be selling in 10 years but it will be what customers want.
But they don't want salads.
They want burgers.
But we still have them on the menu because there are some that do want salads and if we don't sell them in the traggetsal way, maybe we could sell them in a wrap.
When we come back, we find out what it takes to pass the test at hamburger university.
It's called fast food but what mcdonald's sevens up is actually a product of years of research, whether the latest menu item or leadership development.
On the grounds of mcdonald's headquarters just outside chicago, hamburger university is recommended training for all the companies managers and franchise owners.
Mcdonald's co-owner ray crock's commitment to employees led to the creation of hamburger university.
If-year going to grk going to go anywhere, we have to have some talent.
A unique curriculum that combines homework with hamburgers.
This weeklong program puts its students throughout procedures in a way no other hamburger company duds.
It's not a cooking school.
On average each mcdonald's restaurant brings in about $2.6 million.
So its goal so to provide managers like kevin with real business smarts.
What's your goal?
My goal is to become an operator some day, i want to keep working up.
Charlie and jim have climbed the golden ags.
Paying their dues in the kitchen before becoming c.e.o.'s. which means people like michelle could be training the company's next c.e.o. they have to think bigger picture.
A lot of times we get bogged down by the day-to-day, the big details.
It's about big picture and diagnosing your situation.
This gives students 30 seconds to congress ore 36 snare's in a restaurant.
Everything we do here they run into, whether it's a buzz that comes on the lot or a customer slips and falls or something burning in the kitchen.
And anyone who thinks this is just a week off work, think again.
A week through hamburger u. gets you real college credit recognized by the american counsel on education.
Can you see an improvement in sales after your managers go through hamburger u? what we see is better efficiency and management and yes, that yields better sales but it's about something brooder at mcdonald.
You don't get a chance to become a restaurant manager until you have qualified by both in-restaurant training and out of restaurant training and education.
People management, supply chain management.
Food quality and safety.
What it means to market locally.
What the local community means.
All of these kinds of things, strategic planning relative to how much labor you have in the restaurant, what food costs are.
All of these are things that our managers learn as they were developing.
You don't learn it was -- all as a manager but as an assistant manager, as a department manager as you come through the mcdonald's system.
We're very big on education and ongoing education for managers and then as those managers move forward then through supervision and then up through the system and then ultimately our chief operating officer globally.
You travel often.
In europe, things are pretty bad there still.
Some have said look, we're in a recovery in europe but you've said before i'm not sure if i see that everywhere.
Maybe countries across europe would say they don't necessarily see themselves -- themselves in a recovery mode either.
I think the southern part of europe clearly.
When you think about what's happening in spain, portugal.
Jobless rates there.
Unemployment rates across italy or across europe are on average above 10%. which is a big number.
Spain is about 27% unemployment.
The bigger challenge is youth unemployment is in the mid 50's. these challenges across europe based on unemployment and also austerity based measures.
Our business over there, again, we're gang market share in many of the market, despite contracting i.e.o. and consumer discretionary spending being softer.
Nudges they're challenging environments.
We have to stay focused on customers, stay focused on the -- having the right value and the items to appeal to customers.
This is a market share game and we're at ourer best if we focus on the market.
There is a lot of competition overseas and china is a fast growing market.
Sales in the second quarter were down about 6%. k.f.c. young brands, pizza hut, they've gotten ahead of you in market share.
How are you going to catch new china?
China is going to be a growth market for us.
We've been gaining share back again in china.
Yes, it's been troublesome relative to what's happened with chicken.
There was an antibiotic scare, which was not a part of our mcdonald's system or our supply chain but nonetheless it impacted consumers and their psyche across china.
That was phenomenonned up by avian influenza, which was a much broader asian epidemic, if you would.
We've seen the avian influenza impact dissipate, which is great for the marketplace and we've seen customers starting to come back relative to chicken purchases but china is going to be a positive market for us.
We're not gauging our success in china based on swudges.
We have to gauge that based on how many customers come to mcdonald's. back in the united states, you have to continue to grow your market share.
Some of the market analysts said look, the company is so big that it's really going to take something to move the needle.
What do you say to that?
Everyone needs to keep in mind we grow revenues.
Not many are growing revenues.
We grew revenues, income, earnings per share and we've taken market share and we've outperformed the competitors.
There are a few players in the market that are doing well.
We're one of the players that is positive and gaining market share.
I would say we're doing well in the u.s. relative to our own position.
Our business is a retail and consumer based business.
Every day it's slightly uncertain.
We have to be able to manage through and provide the things they want.
My focus is on these golden arches.
? sports business is not just about dollars and cents.
It's about personality and brands that connect.
About icons like kobe bryant who understands what it takes to dominate the global mark place.
If you would describe yourself a businessman, a basketball player or a brand, what would it be?
I'd say a brand because you can wrap them all into that.
It's about legends like gary player who's always given golf everything he's got and gives sponsors more than they could possibly ask for.
My life is is based on giving.
It's about rising stars like joe flacco, a super bowl champion who's gone about his business like a regular guy.
And leaders like derek hall, a c.e.o. who keeps his baseball organization humming, literally.
? circle circle of life ? in the big business of sports, it's the personal touches that count.
Find out just how much on "sportfolio." [captioning made possible by bloomberg television] hello, i'm rick horrow and welcome to "sportfolio," bloomberg's weekly inside look at the business of sports.
Over the past year we've had the opportunity opportunity to meet some of the most important figures in sports and find out face to face how they do their jobs and build their brands.
It's instructive and a lot of fun.
This week we put together four of our favorite profiles from the program, starting with the man who's become a one-name brand, kobe.
When stephanie sat down with kobe bryant last december, nike was about to release the latest version of his basketball shoe.
Stephanie gave us a window into an athlete at the top of his game and a business person with ambitions beyond the game.
When i sat down with kobe bryant at the launch of his newest nike shoe, i learned how seriously he takes the sneaker business.
Nike is filled with ultracompetitive people.
We're all essentially cut from the same cloth so we speak the same language.
So you have designers and tech engineers and so zport so on who are as passionate about what they do in anywhere respective fields as i am in mind.
And i learned how he feels about following magic johnson or michael jordan into nba ownership.
I don't know if ownership is really the right thing for me.
I'd go crazy -- why?
If a finger misses a game because he has a broken fingernail, i'd lose my mind.
So at age 234 with the end of his playing days in sight.
I tried to draw kobe out on the subject of his next career move.
How could you truly walk away from the game come retirement?
Wouldn't you want to keep a foot in?
Keep a sneaker in?
I'll be in the game and hopefully my brand can live on past my career and i can be a part of inspiring the next generation.
He'll stay around the game but as a brand, not necessarily as an executive.
He's had his share of headaches and responsibilities as captain of the lakers team that has struggled early this season.
When the team makes decisions like a new coach, is it tough for you to not be part of management or do you feel like you get to be part of that decision-making process?
It's always a little dicey, especially when you're talking about players that may be traded and so forth because you're in the locker room with them every day.
It's weird to feel like you're putting on a managerial hat at the same time you're teammates and friends with them.
It's a fine line.
Management does their job.
They do what they do.
If they have questions they can call me and i'll give my opinion.
Kobe gave his opinion when the laker job became available calling phil jackson the best available at any level.
When someone else was hired, he took it in tried troo -- stride.
He gives me plenty of books to read.
Very strange ones.
He's a zen guy.
I look at the title and i think am i going to have anything in common with this book?
I start reading it and it becomes something i enjoy very much.
I'm disappointed he's not part of the organization but i'm very happy with d'antoni.
It's a process.
We've been through so many ups and downs.
I'm very pleased in terms of the improvement we're making.
Our record isn't very good right now but i believe that will change.
Spoken like a man who's been studying zen.
He's already reacting to adversity like a c.e.o., focusing on long-term results, much like another mentor named phil, a business visionary he'll somehow join in the hall of fame.
Do you if i phil night should be in the basketball hall of fame?
He's never played or coached.
When i was growing up i watched off the nike commercials.
Charles barkley commercials.
As a kid, i didn't different between a nike commercial and an nba commercial.
I didn't understand that there was a difference.
To me it was all one in the same.
It was the nba.
This is the game.
What he did for the game of basketball was elevate it globally, for a kid that was growing up in italy and not really watching basketball in that type of sense.
He elevated the game because of what he was doing with jordan and barclay.
Kobe has joined with nike to extend the nba footprint even further.
China is the second biggest market in -- as far as shoes, sneakers.
You were one of the first to embrace china, why?
It was more of a strategy iraq call for us.
At the same time we were going through a little bit of controversy and we had to make a decision on how to attack things from a brand perspective.
I'd been over in china for so many years, doing clinics there.
We wanted to flip the paradigm and kind of initiate everything in china and then hopefully we're fortunate, if we do a good enough job, we'll move it to the united states.
We wanted to start everything in china.
After kobe bryant has made his last jump shot, i suspect he'll jump right into a new role.
He won't be just a global brand ambassador.
With his credentials, he could be basketball's secretary of state.
You've been a leader in basketball.
David stern has given you credit for it.
Do you think the -- basketball should truly go global?
I think basketball is such a beautiful game.
I would love it to become even more global.
If you had to call yourself a businessman, a basketball player or a brand, what would it be?
I'd say a brand because you can wrap them all into that.
I've been very fortunate to be surrounded by great people who helped me come up with great product and help me make right decisions and here i am.
The season did not end well for kobe bryant.
He tore his achilles' late in the year and the lakers were knocked out of the playoffs early.
Given the intensity and competitive edge he brings don't bet against a full comeback for kobe bryant and his team.
Coming up, gary player made his mark as a masters champion and when he comes back to augusta today he shows the same joy and character that served him so well on the course.
"sportfolio" is coming right back.
? sponsorship at the masters golf tournament is almost as exclusive as membership in augusta national.
They have only three official sponsors, me mever said benz, at&t and i.b.m. but sponsors can combine with golfers and if you attend as a guest of gary player, you get the experience of a lifetime.
For gary player augusta has been the scene of some legendary golf and the site of some legendary business meetings.
One of the greats stories is sitting turned oak tree with the now-deceased eli callaway.
He said mark, if we could have gary player and arnold palmer and jack nicklaus.
Under the oak tree and here we are and we still have a great relationship with the callaway golf company and the masters has been a great part of that.
It's been an integral part of our brand building, our hospitality and come back every year.
Player competed in his 52nd and final masters in 2009 but he returns to augusta each april to play golf, see friends and to strengthen one of the most successful international brands in sports.
My son, myself and our company, we invite all our sponsors from all over the world to join us and we hire three houses.
We go to great suspense to appreciate this.
We rent the same home.
We're able to put together a program that is consistent in the delivery of service, style of food.
So it creates a wonderful, wonderful platform for us to entertain our past customers, our current clients and of course, new business.
You bring new business guys here, they invariably come.
Before the tournament, black knight international hosted a party to celebrate player's 60 years in golf.
They enjoyed a traditional south african barbecue, rubbed elbows with guests of honor and relaxed afterward with some unusual entertainment.
Having people like gary down here representing the product and meeting with our clients and partners and representing brands is really important for us.
He's done this for 66 years and it doesn't get old.
How does that happen and i don't know.
If i could figure that out i would bottle it and sell it.
If i represented nicklaus or palmer i'm not sure i could do the same things because they are not the same way in how they give of themselves.
Black knight includes callaway and rolex that have been on board for decade.
His ebull yenlt personality and commitment to fitness led to a rhythm with health care giant h -- huma.
Gary represents everything we stand for.
With tickets to this year's masters selling for more than $10,000 the value of access to augusta national is clearly soaring.
Combine that with a golf legend to values the personal touch and the price becomes priceless.
It's an opportunity to bring people that want to bond with us and him at the same time.
We keep it intimate but gary is very engaming and makes them feel wanted.
He interacts with them and he understands the importance of hospitality.
The importance of no substitute to personal contact.
You see, if you give love, you receive love and my life is based on love, trying to contribute to society because i was poor in i've been in a position to give back and golf is a great catalyst at giving back.
Gary player was one of the few golfers who spoke directly in favor of granting women membership at augusta national and was one of the first to welcome con lisa rice as a member in 2013. the black knight was influential in pushing the master field to african-americans in the 1960's and when gary player talks about golf and giving, it's about for -- far more than corporate hospitality.
Coming up, joe flacco of the baltimore ravens is just fine staying close to home.
I want to do the easyst thing possible, just because i feel like i'm pretty shy.
Every nfl franchise would love to find a joe flacco.
You know, a well-grounded, talented quarterback who can lead his team to a super bowl victory with the minimum of fuss and drama.
Since the big win in january, flago -- flacco has been in high demand from sponsors by as we found out in baltimore this spring, the quarterback and his agents are keeping things low key.
This is greg with al packer ford.
Just trying to follow up with you.
Joe usually gives me about 72 hours of his time in the off-season so this is about 48 hours of it.
It's usually a 20% policy with joe where maybe he gets 10 things and picks two.
Now it might be 60 and he picks six of them.
I'm joe flacco, super bowl m.v.p. just look at the stats.
I'm proud to have -- to be part of the winning team at al packer ford.
From a dollar sign he does pretty well but that's not what drives him.
There are some opportunities that have come up now which he's within hear open too but joe's joe.
It was a whirl wind right after we won the game in new orleans but a lot of fun.
Got to enjoy it with my mom, my sister, my wife, my son.
Going to disney and being on letterman.
Going to new york with my wife, all really cool things.
What you see with joe is what you get and i think that's excitele.
Watch you got?
He has certain relationships here in baltimore where, if national companies did come along he would probably be say no just to keep the relationships he has here in baltimore.
I want to do the easiest thing possible.
It would be great if there was an offer where i couldn't say no to it but in general i feel like i'm pretty shy and feel kind of awkward in most of of the settings that i'd be asked to be in.
That would be my reason for being so selective.
Ok, here we go.
Joe is not from baltimore, did not grow up in baltimore, but i think people kind of view him as kind of one of the sons of the community, one of the sons of baltimore now.
We try to piece things together.
He's going to do an opportunity after this with a dari queen where he would piece together with a group we would like money to go through.
You get a chance to impact the family and get to meet some people and really feel something that you've done.
When you do things like that you get a sense for what it's all about and you're able to see that impact and see some emotion and also give that family some of your emotion and let them know a little bit about you.
Thank you and thanks for that super bowl!
When you can relate to someone, it makes it a lot easier.
You root harder for the people you can relate to and i think the city of baltimore, the fabric of the city, i think they see what joe is and he's someone easy to root for.
It should be noted that flacco signed a six-year $$120 million contract in march so he's not hurting for spending money.
Outside his local deals, flacco has signed one pretty sweet endorsement contract.
With harri bow as the spokesman for fwummy bears.
We'll introduce you to a c.e.o. with a heart, a song and with an agenda.
Get "sportfolio" wherever you go on the bloomberg dbs tvplus app for ipads.
? we've met our share of charismatic c.e.o.'s but few leaders combine sports busy savvy and show business personality like derek hall of the arizona diamondbacks.
Don goes backstage with a one of a kind baseball boss.
? wise men say -- what do they say?
Only miller will do ? when people want to whistle wile they work.
That's how we go about it because we have such a long season.
1 2 games, six weeks of spring training and hopefully postseason and it's a grind.
A lot of employees maybe it's their first time on the job.
They're getting in at 7:00 in the morning, staying until might not on days that we have games.
We want to make sure we have fun.
My name is derek.
D. hall, also known as the dirkster.
There's just one derek hamm.
I had some treatry cal experience as a kid, in high school.
I played sports but i was also in theater.
? who can take a taurus -- sell it to you new ? thank you.
They come in with an idea.
Hey, we know you can pull this off.
I'd say happier than a third base coach directing trang.
People drop all kind of stuff in here.
What year is it?
Derek hall's approach to leadership is not just the same old song and dance.
I spent time with him in phoenix this spring and learned that his message to the diamondbacks' organization is carefully scripted.
Every employee -- every employee carries around a copy of our mission statement and this is how we do business.
We reward people based on the circle of success.
We take those individuals and once a year we go on a trip.
We get a custom bus and we go to california and usually disneyland because it's a little fun but i tell people watch customer service and cleanliness.
That is the mecca there.
We usually go to the tonight show or jimmy kimmel and a meet and great.
But a lot of fun.
They want to win.
My other big philosophy is the customer doesn't come first.
To me, the employee comes first.
If we feet the employee well, respect, promote, develop the employee, the employee in turn will treat our upers -- customers and fans the way we expect them to and it's worked.
He's got the intelligence and he's touched the heartstrings of these fans because he cares this is more of a business to him.
You heard it here first -- there's no i in team.
On a scale of one to 10, how good a singer is derek hall?
Could we -- he survive on broadway?
I think he could own broadway.
I would give him 10s across the board.
He's got the looks.
He's pretty much a guy that can do it all.
If i had to choose a song from "the lion king" to use in our setting at work, it would be "the circle of life." we have our circle of success throughout our hallways at chase field.
They have the circle of life field.
I feel like baseball is life.
You're not a part of baseball.
Baseball is a part of you.
That will do it for this edition of "sportfolio." hope you enjoyed this colorful set of sports business portraits.
Our thanks to kobe bryant, joe