Citi — Under Golden Arches?

Will merging brands be the wave of the future for global companies to compete?

November 8, 2003

Will merging brands be the wave of the future for global companies to compete?

American consumer companies have always been notable for providing convenience at a low price.

Although there are plenty of critics of the "McDonaldization" of the world, McDonald's became a global behemoth by appealing to consumers' basic needs all over the world.

Foreign government heads, religious advocates and anti-globalization protesters may not like the brand — but it is marching on around the globe.

Approximately 31,000 McDonald's restaurants now exist in more than 119 countries, confirming that its formula works everywhere.

It has even enjoyed success in India, where a majority of the population does not eat beef — McDonald's main menu offering — on religious grounds. According to the company's website, some 0.75% of the world's population — or 46 million people — visit a McDonald's restaurant every day.

But it is not the American way to rest on one's laurels. To revitalize its business fortunes, which have been sluggish of late, McDonald's is reportedly looking to use its restaurants to sell other products, like toys and consumer goods. Who knows? It may one day become a Wal-Mart rival.

When it comes to powerful global brands “Made in the United States,” few are as dynamic as Citigroup. Its market capitalization of $246 billion in early November 2003 makes it the largest financial conglomerate in the world.

Citigroup came into existence with the 1998 merger of Travelers Group and Citicorp, to form a one-stop powerhouse that offers the full range of financial and insurance serices.

Sandy Weill, the CEO who made it happen, may have retired since. But his basic vision still reigns supreme: As he sees it, all types of financial products could be offered to its clients at a single retail outlet.

Come to think of it, Citi and McDonald's share important similarities. Eating at a restaurant used to be a major event for most people, reserved for a few special occasions.

Now, thanks largely to America's fast food industry — of which McDonald's still is the prime symbol — a restaurant meal has become a mass phenomenon, even accessible to the very poor.

In the 1970s, a McDonald's franchise in Harlem was one of the company's top revenue-producers in New York.

In recent decades, fast food places have become particularly ubiquitous in poor and disadvantaged American neighborhoods.

Banking has also evolved from a relatively upscale activity to a populist one. It used to be that the wealthy banked at commercial banks, while ordinary Americans kept their meager savings at the local thrift.

Relatively few people — mainly those in the top income brackets — had access to credit cards. And again, it was mostly those same well-to-do people who could afford life insurance and stock and bond investments.

Now, however, all these products are available to practically anyone. Once again, in the United States at least, the poor are likely to be the ones who have the most credit cards — and who carry the largest balances.

Like McDonald's, Citi has also spread across the United States, with a presence in more than 100 countries around the world. Its worldwide branches — just like McDonald's restaurants — are now largely indistinguishable from the U.S. ones.

Not surprisingly, banks and fast food restaurants have lent themselves to the ultimate shopper's convenience — a drive-through service.

In many places around the United States, you can make a checking or savings deposit — or order your Big Mac without leaving the comfort of your car.

Now, in the suburbs of Washington, D.C., thanks to the genius of an unknown real estate developer, you can bank and order at a "Citi-McDonald's" in Tyson's Corner, Virginia.

Off Highway 66 and Interstate 495, McDonald's and Citibank are literally under the same roof. For convenience's sake, both firms share a joint drive-through — over which both companies' logos triumph side by side.

The implications of this are enormous. Imagine the marketing and advertising potential of such a business combination.

No doubt, putting McDonald's and Citicorp under the same roof must be considered the world's ultimate brand merger — companies of the world unite!