US embassy cable - 05KINGSTON2349

UNCLAS KINGSTON 002349 
 
SIPDIS 
 
STATE FOR WHA/CAR, EB/CBA 
 
E.O. 12958: N/A 
TAGS: ECON, ETRD, JM 
SUBJECT: BIG MACS NO MORE: MCDONALD'S CEASES OPERATIONS IN 
JAMAICA 
 
1. (U) Friday, October 14, effective 8p.m. local time, all 
McDonald's outlets remaining in Jamaica closed their doors. 
In a September 29 letter sent to Charge, the President of 
McDonald's Caribbean Division Jose Hernandez stated that the 
company's "intent is to continue the search for a qualified 
local franchisee."  The Jamaican locations have been 
operated by the parent company since 2003, when Patricia 
Issacs-Green sold her franchises back to the company. 
Despite rumors that the company never gained the market 
share that they hoped for, it appears that the strict 
licensing requirements of the company were the primary 
reason. 
 
2. (U) McDonald's had been operating in Jamaica since 1995. 
At its height, there were 11 stores around the island.  This 
initial aggressive push, when few other U.S. "Quick-Service 
Restaurants" (QSRs) existed, proved too optimistic, and the 
local franchisee, Issacs-Green, scaled back to eight 
outlets.  In 2003, however, she decided to sell her stores 
back to her corporate parent, ostensibly to "spend more time 
with her family and pursue other interests."  McDonald's 
sent Steve Blackwood to Jamaica to run the operation while 
seeking a suitable franchisee to take over. 
 
3. (U) McDonald's franchising requirements, however, are 
significant.  In addition to the service fees, marketing 
fees and monthly rents that are industry standards, 
McDonald's also requires that the franchisee spend nine 
unpaid months learning all aspects of their corporate 
culture, and must commit to making the restaurant(s) their 
only business interest.  In the opinion of local 
entrepreneurs, it was this requirement that made searching 
for a successor to Issacs-Green virtually impossible.  Becky 
Stockhausen, the Director of the American Chamber of 
Commerce and a longtime resident of Jamaica, told Econoff on 
October 13: "Jamaican [businesspeople] would simply never 
sign off on a commitment to one interest over the long 
term."  Jamaican investors, she said, own and operate many 
different businesses, and the concept of putting all of 
one's time into a single project would simply not appeal to 
the business culture here. 
 
4. (U) Marielena Santana, corporate spokeswoman from 
McDonald's Puerto Rico-based Caribbean Division, also 
emphasized the corporate atmosphere as the reason why the 
company had difficulty finding a franchisee, and stated that 
in smaller international markets like Jamaica, the company 
does not typically direct operations.  She noted, however, 
that Blackwood will remain in Kingston for several months, 
in order to assist the approximately 250 employees who will 
have to transition to new employment, and to ensure that the 
company meets all its financial and legal responsibilities. 
She said that the company hopes to find a suitable Jamaican 
franchisee in the future, but Stockhausen and others stated 
that they felt that it will be virtually impossible for the 
company to regain even the minimal foothold that it had here 
once they leave. 
 
5. (U) Comment: This is not the first Caribbean island to 
lose McDonald's, despite the subsequent presence and success 
of other QSRs like Burger King and Kentucky Fried Chicken. 
Stockhausen noted that Barbados and Trinidad and Tobago have 
seen the company come and go while others survive.  While 
this might seem to suggest an Achilles Heel in their 
globally successful armor, indications are that it is not 
the product, but rather the corporate demands that have led 
to this result.  If they intend to return and prosper in 
Jamaica, it would appear that some flexibility may be 
required.  End comment.