We all understand the importance of relationships in business. And customers at McDonald’s restaurants both in the U.S. and around the world will have a clear reminder too when they can no longer find their favorite condiment. McDonald’s recently announced the unprecedented move of severing its relationship with arguably one of the world’s most famous ketchups.
Well, H.J. Heinz Co. was just acquired by Bershire Hathaway and Brazil-based 3G Capital. 3G Capital also owns the Burger King hamburger chain, reports the Pittsburgh Post-Gazette.
Add to this 3G’s impolitic decision to install former Burger King CEO, Bernard Hees, as the head of the iconic Pittsburgh ketchup company. Let’s just say McDonald’s doesn’t want to do business with the former head of their chief rival.
It’s an understandable but regrettable development for Heinz ketchup lovers everywhere.
But even more so for H.J. Heinz Co., it would seem.
Relationships Gone Bad Can Hurt a Business
The decision by McDonald’s effectively ends decades of striving by Heinz to rebuild its relationship with the fast food restaurant company in the U.S., the Wall Street Journal reports. That relationship was damaged thanks to supply problems in the ’70s.
But more importantly, the decision will hurt outside the U.S. where the Wall Street Journal says the company was doing even more business with McDonald’s.
As a small business owner, you must constantly think about how business decisions may effect relationships with your existing clients, customers or suppliers.
Will decisions to venture into a new business or take on a new client or partner be seen as a conflict with your existing clients or customers? And can you afford to lose them, if so?
When considering buying a business, think about how customers and clients may react to that new ownership. Will they develop the same working relationship with you? Or was their business completely reliant on relationships forged with the prior owner?
Great reporting, Shawn.
Never put all your eggs in one basket, heh?
I like Hunt’s ketchup. Too bad no one else in the castle does 🙁
The Franchise King®
I see startups go through a transition around business partners a lot.
At first, when starting out you as a startup owner can’t insist on exclusive relationships — heck you’re just happy to have “a” relationship most of the time. But as startups grow and gain more market power, they start to look around and start caring about suppliers who are too close to competitors. Or sometimes the supplier itself will start to be in competition with your company.
It can lead to cooling off and moving to other relationships. If the threat of competition begins to outweigh the benefits….
McDonald’s will adapt. It’ll either find another ketchup supplier or use it as an opportunity to make its own ketchup. Heinz, though they’ve lost a big customer, will also adapt.
It’ll be interesting (and amusing. sorry.) to see what effect this may have on customer foot-fall into the restaurant, if any.
That’s just too bad because Heinz goes really well with their fries. I don’t know what will happen if they will replace it with another ketchup. All I know is that the ketchup must go with the fries. End of story.
Really, if it was me and I was a die-hard Heinz ketchup fan, I’d just go into McD’S with my own lil bottle of Heinz ketchup. Problem solved! 🙂
I can’t taste the difference in ketchup brands and I don’t think people will start bringing their own ketchup. Seems like a big blow to Heinz and a non-issue for McDonalds.
I’m not a huge ketchup fan, but I can actually taste the difference between some brands. But, I agree, though I feel Heinz will and has to adapt, it’s indeed a bigger blow to them than McDonald’s (well, in the pocket anyway).
Patrick Mc Cormack
I like heinz ketchup too! More than i like MacDonald’s so not reall ya problem for me, but sad for heinz. Here in Canada I ahve a favourite ketchup from my favourite grocery store Loblaws their store brand President’s Choice ketchup, it’s great.